LIBRARY 

UNIVERSITY  OF 

CALIFORNIA 

IRVINE 


-  u 


A 

HISTOKY  OF  COMMERCE 


BY 

CLIVE    DAY,    Ph.D. 

KNOX  PROFESSOR   OF  POLITICAL  ECONOMY 
IN  YALE   UNIVERSITY 


REVISED  AND  ENLARGED 


LONGMANS,   GREEN,  AND  CO. 

55   FIFTH   AVENUE,    NEW   YORK 
39   PATERNOSTER  ROW,  LONDON 

TORONTO,  BOMBAY,  CALCUTTA  AND  MADRAS 
1925 


Copyright,  1907,  by 
LONGMANS,  GREEN,  AND  Co. 

Copyright,  1914,  by 
LONGMANS,  GREEN,  AND  Co. 

Copyright,  1922,  by 
LONGMANS,  GREEN,  AND  Co. 


First  Edition,  May,  1907 
Reprinted,  April,  1908;  June,  1909;  August,  1910 

August,  1912 

New  Edition,  June,  1914 

Reprinted,  February,  1916;  April.  1917 

August,  1919 
September,  1920 

August,  1921 

New  Edition  thoroughly  revised,  September.  1922 

Reprinted,  February,  1923;  January,  1924, 

May,  1925 


MADE   IN   THE    UNITED    STATES 


E.  L.  D. 


209296 


PREFACE 


The  year  1914  marks  one  of  the  great  turning  points  in 
history.  I  have  accordingly  revised  the  part  of  this  book 
covering  the  recent  period  to  close  the  narrative  at  that  date, 
and  have  added  another  part,  covering  the  history  of  commerce 
in  the  war  and  in  the  two  or  three  years  of  peace  immediately 
following.  The  commerce  of  the  great  nations  of  the  world 
has  departed  since  1914  far  from  its  accustomed  paths  and 
forms.  In  my  attempt  to  make  intelligible  the  commercial 
changes  of  the  time  I  have  had  to  take  account  of  matters 
in  public  finance,  currency  and  foreign  exchange  which  are 
usually  treated  apart  from  the  history  of  international  trade. 
I  have  thought  it  better,  by  touching  on  these  outside  subjects, 
to  show  the  reasons  for  the  course  which  commerce  has  followed, 
rather  than  to  omit  the  reasons  because  they  are  hard  for  the 
student  of  the  history  of  commerce  to  understand. 

CLIVE  DAY 


IV 


CONTENTS 


PART   I 

ANCIENT  COMMERCE 

CHAPTER  PAGE 

1.   GENERAL  CONDITIONS 1 

II.   ORIENTAL  PERIOD ,      9 

III.  GREEK  PERIOD 17 

IV.  ROMAN  PERIOD 26 


PART   II 
MEDIEVAL   COMMERCE 

V.   CONDITIONS  ABOUT  THE  YEAR  1000 31 

VI.   TOWN  TRADE 41 

VII.   LAND  TRADE 54 

VIII.   FAIRS 63 

IX.   SEA  TRADE 70 

X.   THE  LEVANT  TRADE 79 

XI.   COMMERCE  OF  SOUTHERN  EUROPE 90. 

XII.   COMMERCE  OF  NORTHERN  EUROPE 102 

XIII.  DEVELOPMENT   OF  THE    MEDIEVAL   ORGANIZATION  OF 

COMMERCE 113 

XIV.  COMMERCE  AND  POLITICS  IN  THE  LATER  MIDDLE  AGES  .  123 


PART   III 
MODERN    COMMERCE 

XV.   EXPLORATION  AND  DISCOVERY 128 

XVI.    DEVELOPMENT  OF  THE  ECONOMIC  ORGANIZATION 139 

XVII.    CREDIT  AND  CRISES 150 

XVIII.   THE  MODERN  STATE  AND  THE  MERCANTILE  SYSTEM..  ..  161 

XIX.   SPAIN  AND  PORTUGAL 174 

XX.   THE  NETHERLANDS 190 

v 


VI 


CONTENTS 


CHAPTER  PAGE 

XXI.   ENGLAND:  SURVEY  OP  COMMERCIAL  DEVELOPMENT..  ..  199 

XXII.   ENGLAND:  EXPORTS 209 

XXIII.  ENGLAND:  IMPORTS;  SHIPPING;  POLICY 219 

XXIV.  FRANCE  :  SURVEY  OF  COMMERCIAL  DEVELOPMENT 229 

XXV.   FRANCE:  POLICY 242 

XXVI.   THE  GERMAN  STATES 250 

XXVII.  ITALY  AND  MINOR  STATES 263 

PART  IV 
RECENT  COMMERCE 

XXVIII.   COMMERCE  AND  COAL 270 

XXIX.   MACHINERY  AND  MANUFACTURES 280 

XXX.   ROADS  AND  RAILROADS 290 

XXXI.   MEANS  OF  NAVIGATION  AND  COMMUNICATION 302 

XXXII.   THE  WARES  OF  COMMERCE 317 

XXXIII.   THE  MODERN  ORGANIZATION 329 

'XXXIV.   COMMERCIAL  POLICY 345 

XXXV.   ENGLAND:  COMMERCIAL  DEVELOPMENT,  1800-1850.. ..  357 

XXXVI.   ENGLAND  :  REFORM  OF  COMMERCIAL  POLICY 368 

XXXVII.   ENGLAND:  COMMERCIAL  DEVELOPMENT,  1850-1914 376 

XXXVIII.   ENGLAND  :  PRE-WAR  PROBLEMS 386 

XXXIX.   GERMAN  STATES 400 

XL.   GERMANY  UNDER  THE  EMPIRE 408 

XLI.   FRANCE 422 

XLII.   MINOR  STATES  OF  CENTRAL  AND  NORTHERN  EUROPE..  .  431 

XLIII.   STATES  OF  SOUTHERN  EUROPE 442 

XLIV.  EASTERN  EUROPE 454 

PART  V 
UNITED  STATES 

XLV.   ORGANIZATION  OF  PRODUCTION,  1789 469 

XLVI.   INTERNAL  TRADE  AND  FOREIGN  COMMERCE,  1789 485 

XLVII.   COMMERCE  AND  POLICY,  1789-1815 498 

XLVIII.   NATIONAL  EXPANSION,  1815-1860 511 

XLIX.   EXPORTS,  1815-1860 530 

L.   IMPORTS,  POLICY,  DIRECTION  OF  COMMERCE,  1815-1860  540 

LI.   NATIONAL  DEVELOPMENT,  1860-1914 552 

LII.   EXPORTS,  1860-1914 566 

LIII.   IMPORTS,  POLICY,  DIRECTION  OF  COMMERCE,  1860-1914  578 


CONTENTS  Vll 


PART  VI 
WORLD  WAR 

CHAPTER  PAGE 

LIV.   COMMERCE  AND  THE  WORLD  WAR,  1914-1918 593 

LV.   UNITED  KINGDOM,  1914-1920   607 

LVI.   FRANCE  AND  THE  PROBLEM  OF  REPARATIONS 622 

LVII.   CENTRAL  AND  EASTERN  EUROPE,  1914-1920 634 

LVIII.   UNITED  STATES,  1914-1920 648 

INDEX  . .                  671 


LIST  OF  MAPS 


NO.  PAGE 

1.  The  Ancient  World  (colored) Facing  9 

2.  Roman  Roads  in  Southern  Britain 28 

3.  Tolls  on  the  River  Loire 58 

4.  The  Fairs  of  Champagne 66 

5.  Trade  Routes  between  Asia  and  Europe        ...  85 

6.  The  Venetian  Empire 91 

7.  Trade  Routes  between  Germany  and  Italy    ...  94 

8.  The  Hanseatic  Commercial  Empire  about  1400         .  106 

9.  Commercial  Geography  of  Europe  about  1250    .      .  108 

10.  Trade  Relations  of  a  German  Merchant  about  1400  114 

11.  A  Medieval  Map  of  the  World        .     .      .      .Facing  129 
The    Laurent ian    Portolano    of    1351.     Reproduced 

by  permission  from  Beazley's  "Prince  Henry,  the 
Navigator,"  (Putnams). 

12.  Discoveries  of  the  Portuguese 131 

13.  Map  of  the  Known  World  in  the  Time  of  Columbus  132 

14.  European  Powers  in  America  (colored)     .      .Facing  166 

15.  The  Spanish  Monarchy       .       .........  175 

16.  European  Powers  in  the  East  about  1700      .     .     .  193 

17.  Spheres  of  Trade  of  English  Companies  in  the  Early 

Seventeenth  Century        ........  203 

18.  The  French  Colonial  Empire 237 

19.  Germany  in  the  Eighteenth  Century 251 

20.  Italy,  1515 263 

21.  Waterways  of  North  Central  Europe 294 

22.  Growth  of  the  European  Railroads 298 

ix 


X  LIST  OF  MAPS 

NO  PAGE 

23.  The  British  Empire,  1902  (colored)    .     .     .Facing  362 

24.  Development  of  the  German  Zollverein    ....  403 

25.  The  Trans-Siberian  Railroad 463 

26.  North  America  in  1782 470 

27.  United  States,  Acquisition  of  Territory,  1783-1853  .  513 

28.  River  Transportation  in  1860 517 

29.  Canals  of  the  United  States     .      .     .     .     .  Facing  520 

30.  Railroads,  1830-1850 524 

31.  Railroads,  1850-1860 525 

32.  Products  of  the  United  States 568 

33.  Course  of  Steamship  Lines  in  1880 587 


A  HISTORY  OF  COMMERCE 


PART  I.— ANCIENT  COMMERCE 

CHAPTER   I 
GENERAL  CONDITIONS 

1.  The  purposes  of  commerce.  —  The  reader  will  follow 
more  intelligently  the  history  of  commerce  if  he  will  stop  a 
moment  at  the  start  to  consider  the  purposes  of  commerce 
and  the  difficulties  which  must  be  overcome  if  it  is  to  be 
successfully  carried  on. 

As  to  the  purposes  we  may  be  brief.  The  largest  part  of 
the  time  and  energy  of  the  ordinary  man  is  consumed  in 
getting  the  material  things  which  furnish  him  with  the  means 
of  subsistence  and  of  culture.  We  are  accustomed  to  think  of 
the  farmer  and  the  manufacturer  as  charged  especially  with 
supplying  our  material  wants,  but  a  little  reflection  will  show 
that  the  work  of  these  classes,  without  the  aid  of  another 
class,  would  be  of  little  use  to  us.  The  food  and  clothing  and 
tools  and  other  desirable  articles  which  they  produce  are 
valuable  only  when  they  are  put  into  the  hands  of  a  man 
who  wants  them  and  can  use  them.  Articles  which  we  all 
should  pronounce  desirable,  the  ripe  fruit  of  the  farmer  and 
the  finished  product  of  the  manufacturer,  have  still  only  the 
possibility  of  good  in  them;  and  this  possibility  is  realized 
only  when  they  are  put  in  the  place  where  they  are  wanted 
at  the  time  when  they  are  wanted.  It  is  the  business  of  the 
merchant  to  attend  to  the  proper  distribution  of  wares,  in 
place  and  time.  He  does  not  change  the  form  of  things,  like 
the  farmer  or  the  manufacturer,  but  he  is  as  truly  a  producer 
as  they  are. 

1 


2  A  HISTORY  OF  COMMERCE 

Ice  may  be  manufactured  in  summer  by  the  ammonia 
process,  or  it  may  be  saved  from  the  preceding  winter,  or  it 
may  be  brought  in  summer  from  Greenland.  To  the  con- 
sumer it  makes  no  difference  which  one  of  these  methods  is 
employed;  he  wants  his  ice  in  summer,  and  the  trader  who 
satisfies  his  wants  by  saving  or  transporting  the  ice  is  as  useful 
a  member  of  society  as  the  manufacturer  who  makes  the  ice. 

2.  Obstacles  to  the  development  of  commerce,     (i)    Per- 
sonal. —  Great  as  are  the  advantages  of  commerce,  ages  of 
progress  were  required  to  give  it  the  position  which  it  holds 
in  the  modern  world.     It  has  had  to  make  its  way  against 
innumerable  obstacles;  and  to  some  of  these  obstacles  the 
reader  is  asked  now  to  give  his  attention. 

There  is,  first  of  all,  the  difficulty  which  we  may  term 
personal.  A  man  now  accepts  trade  as  a  matter  of  course. 
He  devotes  himself  to  some  special  line  of  production,  the 
growing  of  wheat  or  the  making  of  shoes,  feeling  sure  that  he 
can  exchange  his  surplus  for  whatever  else  he  wants,  and 
making  his  exchanges  without  hesitation.  An  uncivilized  man, 
however,  is  accustomed  to  satisfy  his  wants  in  only  two  ways, 
by  his  own  labor  in  production  or  by  robbing  another  man. 
He  is  suspicious  of  any  offer  to  exchange  wares,  and  is  un- 
willing to  apply  himself  to  any  special  line  of  production  that 
would  make  him  dependent  on  trade.  The  ignorance  and 
suspicions  of  men  were  in  early  times  the  greatest  hindrances 
to  the  rise  of  commerce,  as  they  are  still  in  backward  portions 
of  the  world;  it  has  required  generations  of  experience  to 
teach  men  wants  for  things  which  they  did  not  themselves 
produce,  and  to  teach  them  to  satisfy  these  wants  by  exchange. 
Commerce  took  on  definite  proportions  and  became  of  con- 
siderable importance  only  when  a  special  class  of  traders  and 
merchants  arose,  who  made  it  their  business  to  study  wants, 
to  inspire  newr  ones,  and  to  provide  the  means  of  satisfying 
them. 

3.  (2)  Physical  obstacles.  —  Another  difficulty  in  the  pur- 
suit of  commerce,  which  we  may  term  physical,  appears  in 


the  exchange  of  articles  which  are  produced  at  some  distance 
from  each  other,  so  that  they  need  to  be  transported  by  land 
or  sea.  A  farmer  who  sets  out  for  the  city  with  a  load  of 
grain  will  have  to  count  carefully  the  cost  of  getting  it  to 
market.  Assume  that  he  feeds  himself  and  his  horses  from 
his  wagon-load;  evidently,  if  the  road  is  long,  or  so  bad  that 
progress  is  slow  and  many  horses  are  necessary,  he  may  find 
all  the  wheat  consumed  on  the  journey  before  he  has  secured 
a  purchaser.  In  this  aspect  the  facilities  for  transportation, 
whether  by  land  or  water,  by  pack-animal,  cart,  canal  boat  or 
steamer,  are  of  great  importance.  It  has  been  estimated  that 
a  human  burden  bearer  would  require  more  than  a  day  and  a 
half  to  move  a  ton  of  goods  a  mile;  a  strong  pack-horse  can 
carry  three  hundredweight  a  considerable  number  of  miles  in 
a  day;  while  on  first-rate  level  roads  a  horse  can  drag  a  ton 
even  further.  Another  factor  in  this  question  is  the  character 
of  the  ware.  A  farmer  who  could  not  afford  to  bring  wheat 
to  market  might  still  find  it  profitable  to  bring  butter,  which 
has  much  greater  value  in  the  same  bulk,  so  that  the  profits 
on  a  wagon-load  might  pay  the  expenses  of  the  journey.  Gold 
can  be  exported  from  the  interior  of  Alaska  under  difficulties 
which  would  make  the  transportation  of  any  other  product 
impossible. 

4.  (3)  Risk  of  loss  at  the  hand  of  public  enemies  or  rob- 
bers. —  The  carrier  of  merchandise  has  to  face  not  only  physical 
difficulties,  but  also  dangers  from  another  source.  From  time 
to  time  we  read  in  the  modern  newspaper  of  high  rates  charged 
for  war  insurance,  when  ship  or  cargo  may  be  captured  and 
confiscated  by  an  enemy  on  the  sea.  The  merchant  must 
count  his  insurance  charges  before  he  can  figure  out  his  profits. 
TMs  illustration  will  make  clear  the  character  of  one  of  the 
obstacles  to  commerce,  which  we  may  term  military,  by  some 
stretching  of  the  current  meaning  of  the  word.  It  gives, 
however,  no  idea  of  the  extent  of  this  danger  in  earlier  times, 
when  not  only  were  wars  far  more  common,  but  when  even  in 
times  of  peace  the  state  was  so  weak  that  the  merchant,  in 


4  A  HISTORY  OF  COMMERCE 

every  mile  of  his  progress,  was  exposed  to  attack  by  high- 
waymen on  land  and  by  pirates  at  sea.  Either  the  merchant 
must  bear  his  own  risks,  or  pay  somebody  to  protect  him 
against  them.  In  either  case  the  result  would  be  the  same, 
the  necessity  of  charging  higher  prices  for  the  wares,  and  so 
making  sales  less  attractive  and  less  common. 

6.  (4)  Political  restrictions.  —  Still  another  element  can 
be  distinguished  in  history,  which  seems  often  to  be  an  obstacle 
to  the  development  of  commerce.  This  element  may  be  termed 
the  political.  A  man  is  not  only  a  producer  and  consumer; 
he  is  also,  whether  he  is  conscious  of  it  or  not,  a  member  of 
the  state,  and  subject  to  some  kind  of  political  organization 
which  restrains  and  directs  him  in  his  economic  life.  His 
efforts  to  further  his  own  interests  are  restricted  by  laws 
meant  to  protect  the  interests  of  the  people  as  a  whole  against 
the  selfishness  of  individuals.  A  merchant  in  the  United 
States  who  proposes  to  import  some  ware  from  another  country 
will  find  that  he  must  pay  not  only  the  natural  transportation 
and  insurance  charges,  but  possibly  also  a  customs  duty  in 
addition,  that  would  make  the  exchange  unprofitable.  If  he 
proposed  to  import  a  foreign  ship  for  use  in  the  American 
coasting  trade  he  would  find  that  he  is  absolutely  prohibited 
from  doing  this,  no  matter  how  much  he  might  be  willing  to 
pay  as  duty. 

These  restraints  are  imposed  nowadays,  not  because  the 
government  assumes  that  individuals  cannot  take  care  of 
themselves  and  is  afraid  that  they  may  lose  money  by  making 
purchases  abroad,  but  because  it  thinks  that  they  may  hurt 
the  interests  of  producers  in  the  home  market,  whom  it  pro- 
poses to  protect.  We  shall  find  that  governments  in  earlier 
times  restrained  the  flow  of  commerce  to  protect  not  only 
producers  but  also  consumers  and  even  the  merchants  them- 
selves; and  that  regulations  were  imposed,  of  such  variety  and 
such  strictness,  that  they  made  a  very  important  element  in 
the  commercial  life  of  peoples.  The  church  as  well  as  the  state 
interfered  with  the  course  of  exchange  in  the  Middle  Ages,  and 


GENERAL  CONDITIONS  5 

thought   it   necessary  to  safeguard   public   morals  by   many 
restrictions  which  have  since  disappeared. 

QUESTIONS  AND  TOPICS 

1.  Consider  some  articles  of  your  clothing;  try  to  ascertain  from 
what  different  sources  the  materials  were  gathered  by  the  merchant  for 
the  manufacturer,  and  how  the  finished  product  reached  you.     Do  the 
like  for  a  common  implement,  a  lead-pencil  or  pocket  knife,  or  an  article 
of  furniture.     What  countries  were  drawn  upon  to  supply  the  food  and 
setting  of  your  breakfast  table?     [Compare  The  cost  of  a  dinner,  Out- 
look, March  13,   1897,  quoted  in  Clow's  Introduction  to  the  Study  of 
Commerce,  Silver,  Burdett  &  Co.,  193-194.] 

2.  What  articles  would  you  have  to  do  without  if  your  supply  were 
limited  to  the  things  produced  within  a  radius  of  10  miles  of  your  home? 
Within  a  radius  of  100?     Within  a  radius  of  1,000? 

3.  Ice  was  given  as  an  example  of  a  ware  which  varies  greatly  at 
different  times.     Are  all  wares  subject  to  such  variation?    [If  you  find 
what  seems  to  be  an  exception,  verify  it  by  the  wholesale  prices  quoted 
in  newspapers.] 

4.  What  is  the  use  of  grain  elevators  and  wheat  speculators? 

5.  Can  you  detect  any  difference  between  city  people  and  country 
people  in  making  a  bargain? 

6.  What  has  been  the  attitude  of  the  North  American  Indians  to 
trade?    With  what  wares  have  traders  had  to  tempt  them? 

7.  Arrange  the  following  articles  in  the  degree  of  their  transporta- 
bility, i.e.,  according  to  the  distance  which  they  may  be  carried  with 
profit:  raw  cotton,  coal,  potatoes,  silver,  building  stone,  gold,  wheat, 
cotton   cloth,   diamonds,   hay,   coffee,   salt,   silk  ribbons,   copper.     [The 
price  per  pound  of  many  of  these  wares  is  given  in  the  newspaper.] 

8.  Give  an  instance  of  articles  wasting,  unused  for  lack  of  good 
wagon-roads;  for  lack  of  railroads. 

9.  In  what  regions  has  piracy  persisted  to  recent  times?    [Read 
some  description  of  Borneo  or  of  the  Philippine  Islands,  or  a  description 
of  Chinese  junk  trading  and  Chinese  river  life.] 

10.  What  effect  did  the  Civil  War  have  on  American  commerce? 
[See  reference  in  chap.  51.] 

11.  In  what  regions  of  the  world  is  land  trade  still  unsafe? 

12.  To  what  restrictions,  if  any,  does  an  American  merchant  have 
to  submit  who  desires  to  trade  in  one  of  the  following  wares:  cigars,  gun- 
powder,  whisky,    lottery    tickets,   imported    iron,    cigarettes,    improper 
literature? 

13.  Government  restrictions  now  are  due  usually  to  one  of  three 


6  A  HISTORY  OF  COMMERCE 

objects:  (1)  collection  of  revenue,  (2)  protection  of  other  producers,  (3) 
protection  of  the  consumer  and  the  public.  Classify  the  wares  above 
according  to  the  object  of  the  legislation. 

14.   Read  Bourne,  Romance  of  trade,  96-137,  on  the  close  relations 
of  politics  and  commerce. 


The  reader  will  find  at  the  end  of  most  of  the  following  chapters 
titles  of  books  suggested  for  further  reading  and  study;  titles  of  books 
that  are  warmly  recommended  are  marked  by  an  asterisk,  titles  that  are 
particularly  noteworthy  are  marked  by  two  asterisks.  In  all  cases  the 
references  are  restricted  to  books  available  in  English.  The  prices  given 
are  in  most  cases  those  at  which  the  book  was  sold  before  the  war,  and  are 
retained  as  giving  some  indication  of  the  relative  expense  involved  in 
the  purchase  of  the  books;  prices  have  changed  so  much  during  and 
after  the  war  that  an  attempt  to  list  current  prices  appears  impracticable. 

BIBLIOGRAPHY.  • —  The  best  available  bibliography  of  English  books 
on  the  history  of  commerce  iS'Sonnenschein's  Bibliography  of  social  and 
political  economy,  London,  1897,  reprinted  from  The  Best  Books  and  The 
Reader's  Guide.  Useful  bibliographical  information  will  be  found  also 
in  Palgrave's  Dictionary,  and  in  the  Subject  Index  of  the  British  Museum 
Library,  which  has  been  published  at  brief  intervals  since  1902,  and  which 
lists  all  the  new  books  added  to  the  Library.  The  American  Economic 
Review,  established  in  1911,  is  a  quarterly  publication  which  has  devoted 
particular  attention  to  the  bibliography  of  economic  subjects,  and  which 
should  be  consulted  for  the  announcement  of  new  books,  the  summary 
of  articles  in  periodicals,  and  the  appreciation  of  important  works  in 
book  reviews.  The  American  Library  Association  Catalogue,  which  has 
appeared  in  various  editions,  gives  full  bibliographical  information  about 
popular  books  which  are  on  sale  in  the  American  market. 

In  default  of  a  general  bibliography  the  student  must  refer  to  books 
describing  conditions  in  England.  The  most  complete  and  scholarly  bibliog- 
raphy is  that  given  by  Cunningham,  in  appendixes  to  his  Growth,  etc. 
References  which  to  most  students  will  be  more  useful  are  given  in  Train's 
Social  England.  Both  these  sources  cover  the  whole  period,  into  the  nine- 
teenth century.  For  the  medieval  period  the  general  student  has  a  bibliog- 
raphy approaching  near  to  perfection  by  Charles  Gross,  Sources  and 
literature  of  English  history,  London  and  N.  Y.,  1900,  and  the  student 
of  the  history  of  commerce  will  find  many  references  in  the  Select  bibliog- 
raphy of  English  mediaeval  economic  history,  edited  by  Hubert  Hall, 
London,  1914.  A  revision  of  C.  K.  Adams,  Manual  of  historical  literature, 
which  has  been  undertaken  by  the  American  Historical  Association  will 
be  of  great  value  when  completed. 


GENERAL  CONDITIONS  7 

MANUALS.  —  Cheesman  A.  Herrick,  **  History  of  Commerce  and 
industry,  N.  Y.,  1917,  resembles  in  plan  the  present  book.  Bibliographies 
are  appended  to  the  different  chapters.  Two  English  manuals  on  the 
history  of  commerce,  H.  de  B.  Gibbins,  *  History  of  commerce  in  Europe, 
London,  Macmillan,  1891,  and  J.  R.  V.  Marchant,  Commercial  history, 
London,  Pitman  [about  1901],  suffer  from  the  attempt  to  compress  an 
immense  number  of  facts  into  a  small  compass.  William  C.  Webster, 
*  General  history  of  commerce,  Boston,  Ginn,  1903,  $1.40,  marks  a  de- 
cided advance  in  the  selection  and  presentation  of  material,  but  is  lacking 
in  scholarship;  the  present  writer  discusses  this  book  in  detail  in  Yale 
Review,  Feb.,  1904,  vol.  12,  p.  436  ff.  It  has  scattered  bibliographies, 
unclassified.  George  W.  Sanford,  *  Outlines  of  the  history  of  commerce, 
Chicago,  Powers  &  Lyons,  1902,  occupies  a  place  by  itself,  and  should  be 
of  decided  value  in  supplementing  any  manual.  It  gives  topical  outlines 
of  the  different  chapters  in  the  history  of  commerce,  suggestions  and 
references  for  reading,  and  skeleton  maps  for  the  student  to  fill  in.  It 
seeks  to  give  no  information  directly. 

GENERAL  WORKS.  —  Of  the  general  works  on  the  history  of  commerce 
most  are  old  and  out  of  print.  Of  these  only  one  need  be  noted  here, 
Lindsay's  *  History,  of  which  the  first  volume  covers  ancient  and  medieval 
times.  This  will  be  of  value  to  any  school  library,  if  it  can  be  procured. 
John  Yeats,  Growth  and  vicissitudes  of  commerce,  Boston,  Boyle,  covers 
the  whole  subject,  from  ancient  to  recent  times,  in  a  volume  of  about 
400  pages;  it  was  compiled  about  1870,  from  other  compilations,  and 
is  not  to  be  trusted  entirely,  but  is  about  the  only  book  of  its  kind  now  in 
the  market.  Bourne's  *  Romance  of  trade  and  Oxley's  *  Romance  of 
commerce  answer  well  to  the  description  Bourne  gives  of  his  book,  "  an 
interesting  gossip-book  about  commerce";  both  books  contain  readable 
discussions  of  various  topics  in  the  history  of  commerce,  and  references 
will  be  given  to  them  hereafter.  Morris,  History  of  colonization,  2  vols., 
N.  Y.  Macmillan,  1900,  would  be  a  valuable  book  to  the  teacher  if  it  were 
well  done,  as  it  covers  the  history  of  colonization  and  commerce  from 
earliest  times  to  the  present.  It  is,  however,  so  badly  constructed  and 
so  unreliable  that  it  cannot  be  recommended.  See  the  reviews  in  The 
Nation,  Yale  Review,  American  Historical  Review.  A  far  better  book 
on  the  subject  is  A.  G.  Keller,  **  Colonization,  N.  Y.  1908. 

The  book  which  I  recommend  most  strongly  to  teachers  who  are  re- 
stricted in  their  choice  is  Cunningham's  **  Growth;  it  will  enable  the 
teacher  to  dispense  with  many  other  books,  and  no  other  book  could  be 
substituted  for  it.  Ashley's  *  Economic  history,  always  desirable,  is  less 
necessary  for  the  purposes  in  view  here.  Ashley's  **  Economic  Organiza- 
tion of  England,  London,  1914,  is  an  admirable  survey  of  English  economic 
history  and  is  well  suited  to  serve  as  collateral  reading,  but  has  little  on 


8  A  HISTORY  OF  COMMERCE 

the  history  of  commerce  proper.  If  Cunningham's  large  work  is  provided, 
the  teacher  and  student  can  afford  to  neglect  the  smaller  manuals  on 
English  economic  history  by  Cunningham  and  MacArthur,  Warner, 
Price,  Cheyney  (revised  edition,  1920),  Usher,  and  others.  Frederic  A.  Ogg 

*  Economic  development  of  modern  Europe,  N.  Y.,  1917,  deserves  sepa- 
rate mention  since  it  embraces  not  only  England,  but  also  the  more  im- 
portant countries  on  the  Continent;   it  covers  the  earlier  periods  briefly, 
ibut  treats  the  nineteenth  century  fully,  and  has  extensive  bibliographies. 

Many  of  the  general  histories  of  Europe  and  England  can  be  used  to 
advantage  by  the  teacher  or  student  of  the  history  of  commerce.  The 
only  work,  however,  which  can  receive  special  mention  here  is  Traill's 

*  Social  England;  chapters  contributed  by  various  writers  cover  the  history 
•of  commerce  from  earliest  times  to  1885. 

MAPS.  —  The  student  must  look  to  the  general  historical  atlas  for 
help  in  studying  the  history  of  commerce.  He  will  find  that  the  more 
•elaborate  atlases  are  hardly  worth  the  extra  expense  for  his  purposes. 

William  R.  Shepherd,  **Historical  Atlas,  N.  Y.,  Holt,  revised  ed. 
1921,  includes  considerable  economic  material,  is  provided  with  a  full 
index  of  places,  and  will  serve  all  ordinary  needs. 

The  outline  maps  of  the  McKinley  Publishing  Company  (Philadelphia), 
;and  the  Rand  McNally  Co.,  will  be  found  valuable  for  the  use  both  of 
•teacher  and  class. 

In  many  cases  a  modern  atlas  is  more  desirable  than  a  historical 
atlas.  Longmans'  **  School  atlas,  N.  Y.,  1901,  is  an  admirable  work, 
which  should  be  in  the  hands  of  every  student,  and  the  Century  **  Atlas 
Is  indispensable  for  reference  purposes. 


CHAPTER  II 

ORIENTAL  PERIOD 

6.  Prehistoric  commerce.    Ancient  Egypt.  —  The  origins  of 
commerce  are  lost  in  obscurity.     Before  people  are  sufficiently 
civilized  to  leave  written  records  of  their  doings  they  engage 
in  trade;  we  can  observe  this  among  savage  tribes  at  the 
present  day,  and  we  know  that  it  held  true  of  the  past,  from 
finding  among  the  traces  of  primitive  man  ornaments  and 
weapons  far  from  the  places  where  they  were  made.     Such 
evidences,  interesting  as  they  are,  belong  to  the  prehistoric 
period,  and  this  sketch  of  early  commerce  must  begin  with  the 
peoples  who  had  acquired  the  art  of  writing  and  have  left  us 
records  from  which  we  can  gain  some  idea  of  their  history. 

First  among  these  peoples,  in  point  of  time,  were  the 
Egyptians.  Three  thousand  years  before  Christ,  at  the  time 
when  the  great  pyramids  were  built,  this  people  had  already 
attained  a  developed  civilization,  which,  in  the  opinion  of 
modern  scholars,  can  be  traced  back  even  thousands  of  years 
more.  The  Egyptians,  however,  were  not  a  commercial  people. 
Their  main  resource  was  agriculture,  and  though  they  devel- 
oped some  of  the  industrial  arts  to  great  efficiency  they  used 
the  products  for  direct  consumption  rather  than  for  trade. 
Their  country,  a  strip  of  the  Nile  valley  over  five  hundred 
miles  long,  and  but  a  few  miles  wide,  was  so  much  alike  in  -its 
different  parts  that  it  offered  little  inducement  to  internal 
exchange  over  great  distances;  while  its  isolation  by  deserts 
was  a  bar  to  the  growth  of  foreign  commerce.  The  sea,  in 
this  early  period,  was  a  hindrance,  rather  than  a  help,  to 
communication. 

7.  Rise    of   Egyptian  commerce ;    characteristic   wares.  — 

9 


10  A  HISTORY  OF  COMMERCE 

Egypt  never  became  a  commercial  country  so  long  as  it  re- 
mained under  its  native  rulers.  With  the  period  known  as 
the  New  Empire,  however,  beginning  about  1600  B.C.,  com- 
merce at  least  became  more  important  than  it  had  been  before. 
Regular  communication  was  established  with  Asia,  and  cara- 
vans brought  to  the  country  the  products  of  Phoenicia,  Syria, 
and  the  Red  Sea  district.  Before  the  eyes  of  Joseph  and  his 
brethren  "  behold,  a  company  of  Ishmaelites  came  from  Gilead 
with  their  camels  bearing  spicery  and  balm  and  myrrh,  going 
to  carry  it  down  to  Egypt";  to  this  caravan  Joseph  was  sold 
as  a  slave.  The  wares  named  here  were  characteristic  imports 
of  Egypt;  among  others  were  precious  woods,  ivory,  gold, 
wine,  and  oil.  Among  the  exports  of  the  country  were  grain, 
linen,  and  manufactured  wares  like  weapons,  rings,  and  chains. 
Even  to  a  late  period  trade  was  carried  on  by  barter,  the  use 
of  coins  being  rare,  and  many  of  the  imports  came  as  tribute, 
for  which  the  Egyptians  needed  to  make  no  return. 

8.  Development  of  Egyptian  commerce  in  a  later  period.  — 
Only  in  the  last  period  of  Egyptian  independence,  a  few  cen- 
turies before  the  country  was  conquered  by  Alexander,  did 
commerce  bind   it   closely  to  other  portions  of  the  ancient 
world.     The    government,    which    formerly    had    discouraged 
trade,   now   permitted   and   encouraged   it;   Greek   merchants 
came  in  considerable  numbers  to  Egypt;  and  an  active  com- 
merce sprang  up.     It  is  said  that  Necho,  the  king  who  ruled 
about  600  B.C.,  sent  out  Phoenician  sailors  to  attempt  the 
circumnavigation  of  Africa;  and  the  same  king  took  up  the 
work  of  cutting  a  canal  across  the  isthmus  of  Suez  which  was 
completed  shortly  afterward.     The  canal  was  allowed  to  fill 
up  with  sand,  but  was  reopened  later,  and  its  course  may  be 
distinctly  traced,  it  is  said,  along  the  route  of  the  modern 
canal. 

9.  Rise  of  commerce  in  the  Mesopotamian  Valley.  —  The 
district  northwest  of  the  Persian  Gulf,  centering  in  the  river 
valleys  of  the  Tigris  and  Euphrates,  offered  opportunities  for 
the  rise  of  civilization  which  led  to  the  establishment  of  settled 


ORIENTAL  PERIOD  11 

governments  while  Egypt  was  still  living  secluded  from  the 
rest  of  the  world.  This  district  was  rich  in  agricultural  pro- 
ducts, but  lacked  the  metals,  some  of  the  building  materials, 
and  other  of  the  raw  materials  of  industry.  Though  it  was 
bordered  in  part  by  deserts,  communication  with  other  districts 
was  far  easier  than  in  the  case  of  Egypt;  and  commerce  with 
other  countries  early  acquired  an  importance  here  which 
Egyptian  commerce  attained  only  in  the  last  period  of  the 
country's  history.  Ancient  Babylon,  which  rose  to  importance 
some  time  after  3000  B.C.,  under  a  Semitic  people  (with  a 
language  akin  to  that  of  the  Jews),  was  a  market-place  for 
wares  brought  not  only  from  the  South  (Arabia)  and  West 
(Syria),  but  also  from  the  East  (Iran,  the  later  Persia).  Clay 
tablets,  used  like  modern  paper  for  the  preservation  of  records, 
have  been  discovered  and  deciphered  in  modern  times,  and 
show  an  active  trade  in  the  precious  metals,  grain,  wool, 
building  materials,  etc. 

10.  Development  of  commerce  under  the  Assyrian  and 
Persian  empires.  —  Military  expeditions  extended  the  com- 
mercial relations  of  the  people  of  this  district;  and  the  con- 
quests of  an  Assyrian,  who  founded  a  great  empire  about 
745  B.C.,  were  guided  in  part  by  commercial  considerations. 
Babylon,  Armenia,  Syria,  and  parts  of  Iran  and  Palestine, 
were  brought  under  one  rule;  peoples  on  the  frontiers  were 
held  in  check,  and  order  was  fairly  well  maintained  within; 
so  that  merchants  could  traverse  the  different  parts  of  the 
empire,  and  meet  at  its  capital,  Nineveh,  to  exchange  their 
wares.  The  Assyrian  empire  was  made  by  the  sword,  and  it 
fell  by  the  sword  after  a  brief  duration;  but  its  place  was 
taken  by  succeeding  states,  and  commerce  continued  to  grow. 
The  Persian  empire,  which  enjoyed  its  full  power  for  about 
two  hundred  years,  until  its  destruction  by  Alexander  in 
330  B.C.,  included  an  area  more  than  half  that  of  modern 
Europe;  it  stretched  from  the  Mediterranean  on  the  West  to 
the  Indus  on  the  East,  from  the  Indian  Ocean  and  the  Persian 
Gulf  to  the  Black  and  Caspian  seas.  Within  these  boundaries 


12 

lay  some  of  the  richest  regions  of  the^ncient  world,  the  pro- 
ducts of  which  could  now  be  exchanged  without  passing  from 
under  the  protection  of  the  Great  King. 

11.  Relative  insignificance  of  the  commerce  of  the  ancient 
empires.    The    Jews.    The    Phoenicians.  —  In    the    Oriental 
states  which  we  have  hitherto  considered,   commerce  never 
grew  to  a  position  of  decisive  importance  in  the  national  life, 
however  great  it  may  seem  when  we  compare  it  with  its  meager 
beginnings.     It  served  mainly  the  needs  of  luxury,  and  left 
untouched  the  economic  position  of  the  mass  of  the  people. 
If  we  seek  in  the  ancient  Orient  a  people  whose  very  existence 
depended  on  trade  we  must  look  further.     "We  do  not  find  the 
Jews  to  have  been  such  a  people,  though  we  are  accustomed 
nowadays  to  think  of  them  as  devoted  largely  to  the  pursuit 
of  trade.     The  descriptions  of  the  Bible  show  that  they  lived 
mainly  a  pastoral  and  agricultural  life;  and  down  to  the  time 
of  the  Roman  Empire  they  counted  for  little  in  the  world  of 
commerce.     A  truly  commercial  people  we  do  find,  however, 
in  near  neighbors  of  the  Jews,  the  Phoenicians,  who  inhabited 
a  strip  of  land  on  the  coast  of  Syria  and  Palestine,  scarcely 
ten  miles  wide  in  most  places  and  little  over  a  hundred  miles 
long.     They  could  gain  a  scanty  food  supply  from  the  level 
ground,  and  had  timber  in  abundance  on  the  mountains  that 
separated  them  from  the  interior,  but  had  to  look  to  trade 
with  other  peoples  for  the  means  of  growth  which  their  home 
denied  them. 

12.  Commerce    of    the    Phrenicians.    Beginnings    of    sea- 
trade.  —  From  raw  materials  which  were  in  many  cases  pro- 
cured from  other  countries  they  manufactured  products  which 
found  a  market  throughout  the  ancient  world.     Their  cloths 
and  glass  were  celebrated;  they  exported  large  amounts  of 
metal  ware;  and  they  had  a  monopoly  of  the  purple  dye  ex- 
tracted from  a  species  of  shell-fish,  which  was  highly  prized 
throughout  this  period.     These  wares  were  but  a  few  of  those 
in  which  they  regularly  traded;  the  reader  who  would  have  a 
more  detailed  account  of  the  wares  of  Phoenician  commerce, 


ORIENTAL  PERIOD  1'* 

especially  the  imports,  is  advised  to  study  the  description  it 
the  Bible.  They  maintained  an  active  exchange  with  peoples 
to  the  South,  East,  and  North  of  them  by  caravan  routes,, 
while  they  were  the  first  people  of  antiquity  to  secure  such 
mastery  over  the  sea  that  it  could  be  made  the  medium  of 
regular  and  extensive  transportation.  The  beginning  of  these 
sea  voyages  is  lost  in  the  obscurity  of  the  past.  We  know 
that  they  were  highly  developed  by  1500  B.C.,  when  Sidon 
was  the  leading  Phoenician  city,  and  that  they  did  not  cease 
to  extend  when  the  primacy  of  the  Phoenician  cities  passed  to- 
Tyre.  The  Phoenicians  taught  the  art  of  navigation  to  the 
ancient  world.  Their  ships  were  long  the  accepted  models  of 
construction,  and  the  Greeks  learned  from  them  to  direct  their 
course  at  night  by  the  North,  or,  as  the  Greeks  called  it,  the 
Phoenician  star. 

13.  Development  of  sea- trade;  wares  of  Phosnician  com- 
merce. —  Beginning,  presumably,  with  fishing  and  short  coast- 
ing trips,  and  reluctant  always  to  venture  out  in  the  stormy 
season,  they  had  reached  the  islands  of  Cyprus  and  Rhodes, 
and  had  established  regular  commerce  with  Greece  in  the 
heroic  age  of  Greek  history,  say  before  1000  B.C.  From  this, 
point  their  progress  was  rapid,  and  soon  they  had  traversed 
the  whole  Mediterranean,  and  passed  outside  it  into  the 
Atlantic.  The  means  of  cheap  transportation  which  they  con- 
trolled gave  them  an  immense  economic  advantage.  We  may 
accept  as  a  product  of  the  imagination  the  story  that  on  their 
arrival  in  Spain  they  found  silver  so  plentiful  that  they  not 
only  filled  their  ships  but  made  their  utensils,  even  their 
anchors,  from  it;  still  the  story  shadows  forth  a  truth.  They 
found  wares  in  some  districts  cheap  and  begging  a  market 
because  of  their  abundance,  which  were  rare  and  highly  prized 
elsewhere;  and  they  could  make  great  profits  by  exchanging 
wares  so  as  to  put  each  where  it  was  most  wanted.  From  the 
island  which  we  now  call  England  they  procured  tin,  which 
is  a  very  rare  metal  in  Europe,  and  which  was  especially 
desired  as  a  component  of  the  important  alloy  bronze.  They 


14  A  HISTORY  OF  COMMERCE 

got  copper  in  Cyprus  and  Spain,  also  silver  and  iron  in  Spain, 
and  gold  and  ivory  in  Africa.  They  carried  westward  the 
wares  of  the  Orient  (cf.  our  words  cinnamon,  cassia,  hyssop, 
cumin,  manna,  all  from  Hebrew  forms),  and  manufactures, 
which  not  only  gratified  the  momentary  needs  of  Europeans 
but  served  also  as  models  for  imitation. 

14.  Establishment  of  colonies  by  the  Phoenicians.  Car- 
thage. —  The  Phoenicians  are  noteworthy  not  only  as  the 
greatest  merchants  and  the  first  navigators  of  the  ancient 
world;  they  were  the  leaders  also  in  the  founding  of  colonies. 
At  points  important  for  commercial  or  naval  reasons  they 
established  stations  which  enabled  them  to  trade  in  security 
with  the  natives  and  to  control  the  sea.  Gades,  for  instance 
(the  modern  Cadiz),  near  the  straits  of  Gibraltar,  was  a  rallying- 
point  from  which  the  Carthaginians  extended  their  voyages  to 
the  tin  islands  in  the  North,  and  far  down  the  Atlantic  coast 
of  Africa  on  the  South.  Similar  stations  were  established  on 
many  of  the  Mediterranean  islands  (Malta,  Sicily,  Sardinia, 
Balearics);  and  one  founded  on  the  north  coast  of  Africa, 
Carthage  (near  the  site  of  modern  Tunis),  grew  to  especial 
importance.  The  power  of  the  Phoenicians  declined,  a  few 
centuries  after  1000  B.C.,  partly  by  reason  of  internal  dissen- 
sions and  the  attacks  of  land-powers  like  Assyria,  partly  by 
reason  of  the  commercial  rivalry  of  the  Greeks,  who  had  risen 
to  an  independent  position  and  cut  the  lines  of  communication 
between  East  and  West.  In  this  period  Carthage  fell  heir  to 
the  Phoenician  establishments  in  the  western  Mediterranean, 
and  maintained  its  power  and  policy  on  substantially  similar 
lines  until  it  received  its  great  defeats  at  the  hands  of  Rome. 

QUESTIONS  AND  TOPICS 

1.  What    evidences    of    prehistoric  commerce  are  given  by  Indian 
arrow-heads,  wampum,  Indian  ornaments,  or  the  relics  of  the  mound- 
builders? 

2.  What  modern  countries  have  the  strip-form  of  Egypt?    [See  a 
map  of  South  America.] 

3.  Are  there  any  modern  countries  like  Egypt  in  the  uniformity  of 


ORIENTAL  PERIOD  15 

their  conditions  and  products,  diminishing  the  stimulus  to  internal  trade? 
[Study,  for  example,  conditions  in  Alaska,  Nevada,  or  Australia.] 

4.  Are  any  of  the  exports  of  ancient  Egypt  still  characteristic  wares 
of  the  country?    [See  the  Statesman's  Year-Book,  index  under  words 
Egypt,  commerce.] 

5.  What  can  you  infer  as  to  the  security  of  trade  from  the  fact  that 
it  was  carried  on  by  caravans,  bands  of  merchants? 

6.  What    physical    barriers    obstructed    Egyptian    commerce?     [See 
map  33  of  Longmans'  School  atlas,  noting  the  deserts  and  the  cataracts 
of  the  Nile.] 

7.  Write  an  essay  on  the  economic  conditions  of  Egypt,  from  references 
to  that  country  in  the  Bible. 

8.  What  countries  of  the  modern  world  fill  the  space  occupied  by  the 
ancient  empires  of  the  East?     What  commerce  do  they  carry  on?    [See 
Statesman's  Year-Book.] 

9.  Can  you  suggest  any  reasons  why  the  commerce  of  these  regions 
seems  now  much  less  important  than  in  ancient  times? 

10.  Write  an  essay  on  the  economic  conditions  of  later  Babylon, 
from  descriptions  in  the  Bible.     [See  Babylon,  in  the  subject-index  of 
the  Oxford  Bible.] 

1 1 .  Write  an  essay  on  the  economic  life  of  the  Jews  from  the  descrip- 
tions of  the  Bible. 

12.  Write  a  similar  essay  on  the  Phoenicians.     [See  Sidon  and  Tyre 
in  the  subject-index.] 

13.  Show  the  similiarity  of  conditions  in  Phoenicia  and  in  Norway, 
forcing  the  inhabitants  of  both  countries  to  the  sea.     [Study  the  physical 
characteristics  of  Norway  in  a  geography,  and  note  the  history  of  the 
Vikings,  and  the  importance  of  commerce  and  navigation  in  modern 
Norway.] 

14.  Write  a  report,  from  information  to  be  got  from  the  Encyclo- 
paedia Britannica,  on  one  of  the  following  subjects:  — 

(a)  The  commerce  and  manufactures  of  the  Phoenicians.  [See  the 
index  in  the  last  volume  of  the  ninth  edit'on,  under  Phoenicians.] 

(6)  The  manufacture  and  trade  in  glass  in  the  ancient  world.  [See 
vol.  10,  p.  647.] 

(c)  The    Phoenician    purple.     [See    the    references    under    the    word 
Purple,  vol.  20,  p.  116,  and  the  index.] 

(d)  Early  navigation.     [See  the  index.] 

15.  Wares  of  Phoenician  commerce.     [Bible,  Ezekiel,  chap.  27.] 

BIBLIOGRAPHY 

ANCIENT  COMMERCE. — The  best  available  survey  of  the  economic 
development  of  the  ancient  world  is  Cunningham's  **  Western  civ«liza- 


16  A  HISTORY  OF  COMMERCE 

tion  in  its  economic  aspects,  vol.  1,  Ancient  times,  Cambridge  (N.  Y.) 
Macmillan,  1898;  this  may  be  used  for  parallel  reading  throughout. 
On  Egypt,  Adolf  Erman,  Life  in  ancient  Egypt,  London,  1894,  is  interest- 
ing and  reliable.  Readers  of  English  are  fortunate  also  in  having  a  trans- 
lation of  Holm's  *  History  of  Greece,  N.  Y.,  Macmillan,  1894,  4  vols.;  it 
may  be  made  to  serve  as  a  history  of  commerce  in  the  Mediterranean  down 
to  the  second  century.  The  popular  books  on  Alexander's  conquests 
and  their  results,  by  Wheeler  and  Mahaffy,  give,  unfortunately,  little 
attention  to  economic  affairs.  P.  V.  N.  Myers,  *  History  of  Greece, 
Boston,  Ginn,  1895,  is  a  convenient  manual  for  general  reading.  Alfred 
E.  Zimmern,  **  The  Greek  Commonwealth,  revised  ed.,  Oxford,  1915,  is 
an  interesting  account  of  the  economic  and  political  factors  in  Athens 
of  the  fifth  century. 

On  economic  development  in  the  Roman  world  the  student  has  now 
available  a  good  manual  by  Tenney  Frank,  **  An  economic  history  of 
Rome,  Baltimore,  1920.  A  detailed  account  of  conditions  in  the  provinces 
is  provided  by  Mommsen's  *  Provinces  of  the  Roman  Empire,  N.  Y., 
Scribner,  1887,  2  vols.,  $6.  The  current  Roman  histories  give  a  distorted 
idea  of  Roman  commerce  by  viewing  it  from  the  capital. 

MAPS.  —  In  default  of  an  atlas  of  the  history  of  commerce  students 
must  seek  the  maps  scattered  through  special  works,  or  rely  upon  an 
ordinary  historical  atlas.  Justus  Perthes'  *  Atlas  antiquus  (about  $.75) 
can  be  recommended  for  use  in  ancient  history;  it  is  admirably  executed, 
and  is  provided  with  an  index. 


CHAPTER  III 

GREEK  PERIOD 

15.  Greece,  physical  character  and  products.  —  The  men- 
tion of  the  Greeks  at  the  close  of  the  last  chapter  introduces 
us  to  a  people  who  were,  for  a  time,  the  leading  merchants  of 
the  Mediterranean.     The  peninsular  part  of  Greece  has  an 
area  less  than  that  of  the  State  of  Maine,  little  more  than  half 
that  of  the  State  of  New  York.    It  is,  however,  most  richly 
diversified  geographically,  and  no  country  in  the  world  of  an 
equal  area,  it  is  said,  presents  so  many  islands,  bays,  peninsulas, 
and  harbors.     The  coast  line  of  this  little  country  is  longer 
than  that  of  Spain.    No  point  is  more  than  a  few  miles  from 
the  coast,  and  there  are  few  points  on  the  coast  from  which 
an  observer  does  not  see  an  island.    In  the  Greek  sea,  more- 
over, every  island  is  in  plain  sight  either  of  the  mainland  or  of 
another  island,  and  in  the  good  season  the  winds  are  very 
regular.    Favoring  conditions  such  as  these  are  of  vast  impor- 
tance in  the  early  days  of  navigation,  when  sailors  faced  real 
perils  due  to  their  inexperience,  and  perils  of  the  imagination 
which  were  even  greater.     At  home  the  Greeks  inhabited  a 
country  which  was  not  rich  enough  to  support  them  without 
exertion,  but  was,  on  the  other  hand,  not  so  poor  as  to  force 
them  to  use  all  their  ingenuity  in  finding  the  means  of  sub- 
sistence.   They  could  easily  produce  a  surplus  of  oil  and  wine, 
but  found  a  deficiency  of  other  products,  especially  grain  and, 
in  the  early  period,  manufactured  wares. 

16.  Rise  of  Greek  commerce.   Colonies.  —  Though  it  would 
be  hard  to  conceive  a  better  nursery  for  the  growth  of  com- 
merce than  existed  under  the  conditions  here  described,  the 
Greeks,  when  we  first  get  knowledge  of  them,  about  1000  B.C., 

2  17 


18  A  HISTORY  OF  COMMERCE 

were  not  yet  ready  to  take  advantage  of  their  opportunities. 
There  was  some  commerce,  it  is  true,  but  it  lay  entirely  in  the 
hands  of  the  Phoenicians,  who  brought  utensils  and  cloth  and 
took  away  timber  and  metals.  Little  by  little  the  Greeks  rose 
to  commercial  prominence,  and  gained  the  place  formerly 
held  by  the  Phoenicians.  A  striking  feature  of  this  revolution 
was  the  Greek  colonial  movement,  which  covered  some  five 
hundred  years,  and  ended  about  600  B.C.  Greek  emigrants 
settled  throughout  the  ^Egean  Sea  and  established  themselves 
as  a  fringe  on  the  coast  of  Asia  Minor  and  about  the  Black  Sea; 
in  the  West  they  chose  by  preference  the  shores  of  southern 
Italy  and  Sicily,  but  founded  colonies  as  far  as  Malaga  in 
modern  Spain,  and  created  a  great  commercial  center  on  the 
site  of  modern  Marseilles.  The  colonies  kept  up  an  active 
intercourse  with  the  mother  country,  and  Greek  sailors  and 
merchants  ousted  the  Phoenicians  from  their  commanding 
position.  The  Greeks  at  home  began  to  produce  wares  for 
export,  seeking  customers  not  only  among  the  colonists  but 
in  other  markets  also;  they  emancipated  themselves  from  their 
former  dependence  on  Oriental  manufactures,  and  developed 
the  clay,  bronze,  and  woolen  industries  to  a  point  not  dreamed 
of  before. 

17.  Rapid  development  in  the  fifth  century,  B.C.  —  In  this, 
which  may  be  termed  the  preparatory  period  of  Greek  com- 
merce, the  leadership  rested  with  the  Greek  colonies  in  Asia; 
Miletos  was  the  first  of  the  Greek  cities  in  commercial  im- 
portance. The  advance  of  the  Persian  kings  about  500  broke 
the  power  of  the  Greek  colonies  in  the  East ;  at  the  same  time 
the  western  colonies,  especially  Syracuse,  grew  rapidly  in  im- 
portance, and  forced  Carthage  to  recognize  their  supremacy 
in  the  northern'  Mediterranean.  The  mother  country  itself 
was,  however,  that  part  of  the  Greek  world  which  showed  the 
most  striking  gains.  The  successful  resistance  to  the  Persians 
was  followed  by  a  remarkable  development  not  only  in  politics 
but  in  industry  and  commerce  as  well,  and  Greece  now  took 
for  two  centuries  the  position  which  England  occupies  in  the 


GREEK  PERIOD  19 

» 

modern  world.  The  little  island  of  ^Egina  (near  Athens), 
rocky  and  sterile,  supporting  to-day  but  6,000  inhabitants, 
became  for  a  time  the  most  important  market  of  the  Greek 
world;  it  amassed  fabulous  riches  by  a  commerce  penetrating 
all  seas,  aided  by  an  artificial  harbor  and  a  strong  war  navy. 
Another  great  commercial  city,  destined  to  a  longer  career, 
was  Corinth;  this  city  was  the  natural  medium  of  trade  with 
the  western  colonies,  not  only  because  it  offered  an  opportunity 
to  reach  them  without  rounding  the  dreaded  promontory  of 
the  southern  tip  of  Greece,  but  also  because  some  of  the  leading 
colonies  of  the  West  were  Corinthian  or  closely  allied  to  the 
Corinthians. 

18.  Rise  of  Athens  to  leadership.  Exports.  —  The  city  of 
Athens,  which  had  developed  rapidly  in  the  century  preceding 
the  Persian  wars,  rose  to  the  first  place  among  the  Greek 
cities  in  the  century  in  which  they  occurred  (500-400  B.C.). 
The  Athenians  broke  the  power  of  ^Egina  in  armed  conflict, 
and  appropriated  its  commerce;  the  Athenian  sea-port,  the 
Pirseus,  became  the  leading  commercial  port  of  the  Greek 
world,  and  remained  so  until  the  Macedonian  period  (about 
300).  Readers  must  be  referred  to  one  of  the  narrative  his- 
tories of  Greece  for  an  account  of  the  way  in  which  Athens 
built  up  its  empire  in  the  ^Egean  Sea,  and  for  the  story  of  the 
varied  fortunes  of  its  political  power.  Even  in  times  of  defeat, 
when  its  war-navy  was  scattered  and  its  leagues  and  alliances 
broken  up,  it  was  still  able  to  control  a  large  part  of  the  trade 
of  the  ^Egean  and  Black  seas,  and  maintained  an  important 
commerce  with  the  South  and  West.  The  favorable  situation 
of  the  city,  and  the  ability  and  energy  of  its  navigators  and 
business  men,  enabled  it  to  conduct  a  large  carrying  trade  for 
other  peoples,  and  many  of  the  exports  were  foreign  wares 
which  were  merely  transshipped  in  the  Piraeus.  Of  native 
wares  it  exported  silver  and  coin,  from  the  mines  near  the  city, 
some  natural  products  (oil,  figs,  honey,  wool,  marble)  of 
comparatively  slight  importance,  and  especially  manufactured 
wares,  of  which  pottery  was  the  chief. 


20  A  HISTORY  OF  COMMERCE 

19.  Athenian  imports  and  policy.  —  The  chief  import  was 
wheat,  on  which  Athens  was  then  as  dependent  as  England  is 
now;  the  city  had  grown  so  great  by  trade  that  the  surrounding 
country  was   unable   to   support   it.     The   great   granary  of 
Athens  was  the  level  country  north  of  the  Black  Sea,  and 
the  Athenians  made  extraordinary  efforts  to  control  the  narrow 
entrance  to  the  Black  Sea,  that  they  might  assure  their  food 
supply.    They  were  not  entirely  dependent  on   this   source, 
however,  and  imported  wheat  also  from  Sicily,  Egypt,  Syria, 
and  the  mainland  to  the  North.     Among  the  other  imports 
were  ship-building  materials,  salt  fish,  slaves,  raw  materials 
for  the  Athenian  manufacturers,  and  articles  of  luxury.     The 
breadth  of  the  Athenian  trade  is  pictured  in  the  statement  of 
a  contemporary:  "What  delicacies  there  are  in  Sicily,  or  Lower 
Italy,  or  Cyprus,  or  Egypt,  or  Lydia,  or  on  the  Pontus,  or  in 
Peloponnesus,  or  anywhere  else,  they  all  are  brought  to  Athens 
by  her  control  of  the  sea." 

The  commercial  policy  of  the  Athenians  was  framed  with 
an  eye  especially  to  the  interests  of  the  consumer.  What 
duties  were  levied  were  low,  and  had  no  leaning  to  "protection" 
in  the  modern  sense.  The  export  of  articles  especially  desired 
(wheat,  ship-building  materials)  was  restricted  in  the  hope  of 
keeping  up  the  home  supply,  and  commercial  advantages  were 
granted  or  withheld  with  the  idea  of  exercising  political  pressure 
on  other  states;  but  nothing  like  modern  protectionism  can  be 
found  in  the  commercial  policy  of  this  period. 

20.  Contrast  of  the  ancient  and  modern  world;  effect  of 
Macedonian   and  Roman  conquests.  —  In  the  course  of  our 
narrative  we  are  now  approaching  a  point  when  a  great  change 
came  over  the  ancient  world.     The  isolation  of  the  earlier 
states  of  antiquity  is  their  most  striking  feature.     Each  one 
lives  only  unto  itself.     It  rises  in  civilization  and  then  de- 
clines, without  sharing  its  gains  and  losses  with  other  states. 
It  may  conquer  and  hold  them  for  a  time,  it  is  true,  but  it 
rules  them  as  foreign  territory,  with  alien  interests;  and  the 
great  empires  crumble  as  readily  as  they  are  made.     Thia 


GREEK  PERIOD  21 

characteristic  of  ancient  history  is  one  of  its  main  difficulties 
to  the  student,  for  it  deprives  him  of  any  bond  of  connection 
between  the  peoples,  and  forces  him  to  pass  from  one  to  another 
of  them,  until  he  feels  lost  in  the  complexity  of  the  narrative. 

The  modern  world,  with  its  common  fund  of  culture  and 
its  community  of  interests  uniting  different  peoples,  could 
arise  from  these  conditions  only  after  long  centuries  of  struggle. 
The  unity  of  the  Christian  faith  was  needed  to  confirm  the 
union  of  peoples  in  a  common  civilization.  The  process  of 
union  begins,  however,  at  the  point  which  we  have  reached; 
the  great  conquests  of  Alexander  of  Macedon,  and  those  of 
Rome,  did  much  to  break  down  the  barriers  between  peoples, 
and  to  prepare  them  for  the  acceptance  of  a  common  civiliza- 
tion and  a  common  religion.  It  is  to  be  hoped  that  the  student 
knows  already  something  of  the  narrative  of  those  conquests. 
We  shall  have  to  confine  ourselves  to  the  results  as  they  appear 
in  the  history  of  commerce.  Here  the  reader  can  merely  be 
reminded  that  Alexander  united  the  eastern  world  into  an 
empire  extending  from  Greece  to  India,  a  little  before  300  B.C., 
and  that  the  Romans  began  about  200  B.C.  to  extend  their 
authority  outside  the  Italian  peninsula,  and  before  the  birth 
of  Christ  had  subjected  to  it  practically  all  the  peoples  whose 
history  we  have  been  studying. 

21.  Effect  of  Alexander's  conquests  on  commerce;  decline 
of  Greece.  —  In  appearance  the  empire  of  Alexander  outlived 
its  founder  but  a  few  years,  and  then  dissolved.  Alexander, 
however,  was  a  civilizer  as  well  as  a  conqueror;  he  endowed 
the  East  with  a  common  fund  of  Greek  culture;  and  however 
distinct  or  hostile  the  states  might  seem  thereafter  the  peoples 
were  united  as  they  had  never  been  before.  Commerce  took 
on  a  new  aspect.  Greece,  which  before  had  been  at  the  center 
of  the  great  commercial  movements,  was  now  left  on  the 
western  edge.  Greek  merchants  could  for  a  time  use  their 
former  commanding  position  to  share  in  the  great  commercial 
development,  but  in  the  long  run  their  struggle  was  hopeless. 
The  most  energetic  Greeks  left  their  home  to  settle  in  eastern 


22  A  HISTORY  OF  COMMERCE 

countries  which  were  richer,  more  populous,  and  closer  to  the 
great  currents  of  trade.  Corinth  was  the  only  city  which 
managed  to  maintain  and  extend  its  trade.  Athens  declined 
rapidly  in  commercial  importance;  and  grass  grew  and  cows 
were  pastured  in  the  streets  of  other  towns  which  had  once 
been  important  markets. 

22.  Rise  of  great  cities.  —  Some  indication  of  the  develop- 
ment of  commerce,  and  of  the  rearrangement  of  its  important 
centers,  can  be  got  from  a  study  of  the  great  cities  of  the  ancient 
world.     Before  the  time  of  Alexander  there  were  only  three 
cities  of  the  Mediterranean  with  a  population  of  over  100,000, 
Syracuse,  Athens,  Carthage;  none  of  these  had  a  population 
far  above  that  figure.     About  200  B.C.,  scarcely  more  than  a 
century  afterward,  there  were  four  cities  with  a  population  over 
200,000,  Alexandria,  Seleukia,  Antioch,  Carthage;  one  city  with 
a  population  far  above  100,000,  Syracuse;  and  of  cities  with  a 
population  about  100,000  there  were  Corinth,  Rome,  Rhodes, 
Ephesos,  and  possibly  others.     The  names  of  some  of  these 
cities  are  already  familiar  to  us.     Carthage  was  enjoying  its 
last  century  of  commercial  greatness,  before  Rome  robbed  it 
of  its  influence  in  the  northern  Mediterranean.     Syracuse  was 
the  chief  Greek  colony  of  the  West,  destined  also  to  fall  under 
the  Roman  power  just  before  200.     Other  names,  however, 
are  entirely  new  to  history,  or  first  became  of  great  importance 
at  this  time,  and  the  best  idea  of  the  commerce  of  the  period 
can  be  got  by  considering  the  reasons  for  their  greatness. 

23.  Alexandria,    Seleukia,    Antioch.  —  Alexandria,    as    its 
name  suggests,  was  founded  by  the  Macedonian  conqueror. 
It  was  situated  on  a  tongue  of  land  between  a  lagoon  and  the 
sea,  near  the  most  western  of  the  mouths  of  the  Nile.     It  had 
a  double  harbor,  formed  by  the  island  Pharos,  which  has  given 
the  name  for  lighthouse  in  some  of  the  modern  languages 
(French,  phare,  Italian,  fdro),  as  the  most  celebrated  light- 
house of  antiquity  was  erected  there.     Alexandria  furnished 
the  only  good  harbor  for  large  vessels  on  the  coast  of  Egypt; 
it  had  access  to  the  Nile,  tapping  one  of  the  great  granaries  of 


GREEK  PERIOD  23 

antiquity,  and  connected  with  the  Red  Sea  through  the  canal 
that  ran  from  the  Nile  to  the  Bitter  Lakes.  It.  was  at  the 
point  where  the  sea-route  from  the  far  East  reached  the  Medi- 
terranean, and  it  became  by  right  the  greatest  market  and  the 
largest  city  that  the  world  had  known. 

Next  to  it  in  size  and  importance  came  two  other  cities, 
Seleukia  and  Antioch,  which  were  founded  even  later  than 
Alexandria.  Seleukia,  on  the  Tigris,  took  the  place  of  the 
earlier  Babylon  and  the  later  Bagdad;  it  was  situated  in  a 
rich  plain  at  the  points  where  the  routes  from  the  Persian 
Gulf  and  the  Persian  highlands  met  on  their  way  westward. 
Antioch  was  at  the  focus  of  the  routes  by  which  the  trade  with 
inner  Asia  was  carried  on.  Situated  at  a  point  where  the 
Euphrates  approaches  to  within  a  few  days'  march  of  the  coast, 
and  where  the  valley  of  the  Orontes  offers  the  best  means  of 
reaching  the  sea  from  the  interior,  it  had  the  full  benefit  of 
the  revival  of  eastern  commerce  which  followed  the  conquests 
of  Alexander  and  the  enlightened  rule  of  his  successors. 

24.  Rhodes.  —  Only  one  other  city,  Rhodes,  deserves  es- 
pecial attention,  and  this  not  because  of  its  size  alone  but 
also  because  »t  was  so  specifically  a  commercial  city.  The 
little  island  could  offer  but  scanty  products  to  commerce,  but 
it  enjoyed  an  exceptionally  favorable  position,  where  navi- 
gators from  Egypt  and  Syria,  avoiding  the  dangers  of  the 
open  sea,  would  put  in  for  shelter  and  to  trade.  Rhodes 
followed  a  far-sighted  foreign  policy,  guided  by  the  idea  of 
securing  the  greatest  freedom  of  trade;  it  policed  the  seas  and 
repressed  piracy  with  vigor;  and  established  a  code  of  mer- 
cantile law  which  was  celebrated  as  a  model  and  which  invited 
dealings  in  its  market.  The  Rhodians  were  skilful  navigators, 
and  developed  the  principles  of  commercial  association  to  a 
point  of  high  efficiency.  It  is  little  cause  for  wonder,  therefore, 
that  commerce  flowed  hither  from  all  parts  of  the  eastern 
Mediterranean  and  even  from  the  Black  Sea;  that  foreign 
merchants  sent  their  sons  there  to  learn  the  conduct  of  com- 
merce; and  that  great  riches  were  accumulated,  of  which  one 


24  A  HISTORY  OF  COMMERCE 

evidence  was  furnished  by  the  many  colossi,  gigantic  statues, 
about  the  city. 

QUESTIONS  AND  TOPICS 

1.  Prove  the  statement  in  the  text,  regarding  the  Greek  islands. 
Take  a  good  map,  measure  off  on  the  scale  25  miles,  the  distance  at  which 
hills  of  about  125  feet  are  visible  (the  Greek  islands  are  mountainous  and 
the  air  very  clear),  and  show  by  what  stepping-stones  timid  sailors  could 
advance. 

2.  Study  in  detail  the  influence  of  the  physical  characteristics  of 
Greece  on  the  people  and  their  history.     [See  Myers,  chap.  1;  Holm,  vol. 
1,  chap.  2.] 

3.  Write  a  report  on  the  evidences  of  early  civilization  and  trade. 
[Holm,  vol.  1,  chap.  8.] 

4.  Write  a  report  on  the  early  commerce  carried  on  by  Phoenicians. 
[Holm,  vol.  1,  chap.  9.] 

5.  Make  a  careful  study  of  the  Greek  colonial  movement,  noting,  (a) 
the  motives  to  colonization,  (6)  the  extent  of  Greek  colonies,  (c)  the  rela- 
tions with  the  mother-country,  (d)  the  mode  of  life  in  the  colonies,  (e)  the 
influence  on  the  commercial  development  of  the  different  parts  of  Greece. 
[Myers,  chap.  5;  Holm,  vol.  1,  chaps.  12,  13,  14,  21,  25.] 

6.  Write  a  report  on  the  history  of  the  Greek  colonies  of  the  West, 
especially  Syracuse  and  its  contest  with  Carthage.     [Holm,  vol.  1,  chap. 
25 ;  vol.  2,  chap.  6,  29;  Freeman,  Story  of  Sicily,  N.  Y.,  Putnam,  1892, 
$1.50.]  • 

7.  Study  the  growth  of  the  sea-power  and  empire  of  Athens,  indicat- 
ing on  a  map  the  allied  or  subject  cities.     [Myers,  chaps.  15,  16;  Holm, 
vol.  2,  esp.  chap.  17.] 

8.  Contrast  Athenian  exports  of  this  period  with  the  exports  of 
modern  Greece.     [Statesman's  Year-Book.] 

9.  What  is  the  leading  port  of  modern  Greece?    [Same.] 

10.  Write  an  essay  comparing  the  Athenian  and  the  British  empires, 
noting,  (a)  advantages  of  geographical  position,  (6)  products  of  the  home 
country,  exports  and  imports,   (c)  naval  power  and  naval  stations,  (d) 
policy  to  members  of  the  empire,  (e)  commercial  policy  of  the  home  country. 
[See  Myers  or  Holm,  and  the  chapters  in  this  book  on  England;  compare 
E.  A.  Freeman,  Greater  Greece  and  Greater  Britain,  London,  1886.] 

11.  Compare  the  imports  of  ancient  and  of  modern  Greece.     [States- 
man's Year-Book.] 

12.  Make  a  chart,  naming  on  a  horizontal  line  the  leading  states  of 
antiquity,  from  Egypt  to  Rome,  placing  dates  (3000,  1500,  1000,  etc.)  in  a 
column  at  the  left,  and  indicating  changes  in  the  history  cf  each  state  in 
the  appropriate  place  in  its  column. 


GREEK  PERIOD  25 

13.  Draw  a  map  showing  the  extent  of  Alexander's  conquests,  and 
comparing  the  empire  with  earlier  Oriental  empires.     [See  the  maps  in 
Myers,  and  if  no  good  historical  atlas  is  available  consult  the  maps  in  the 
Oxford  Bible,  teacher's  edition.] 

14.  Study  the  influence  of  the  Macedonian  conquests  on  civilization 
and  commerce.     [Myers,  chaps.  25,  26,  27;  Holm,  vol.  3,  esp.  chap.  27.] 

15.  Write  a  report  on  the  economic  decline  of  Greece  after  the  Mace- 
donian conquest.     [Holm,  vol.  4.] 

16.  Is  England  exposed  to  such  a  change  in  the  currents  of  trade  as 
furthered  the  decline  of  Greece? 

17.  Why  do  great  cities  rarely  grow  up  without  the  aid  of  commerce? 
(The  answer  to  this  question  is  suggested  in  a  later  chapter,  but  the  stu- 
dent should  be  able  to  work  it  out  himself.] 

18.  Are  there  any  exceptions?     What  is  the  commerce  of  Washing- 
ton, D.  C.?     Is  there  any  one  of  the  cities  named  in  this  section  which 
may  have  owed  its  size  to  something  beside  commerce? 

19.  Has  there  been  any  later  period  in  which  great  cities  have  risen 
suddenly,  as  in  this  period  after  Alexander? 

20.  Write  a  commercial    history  of   Carthage  from  the  information 
to  be  got  in  a  Roman  history,  or  in  the  Encyclopaedia  Britannica.     Write 
a  commercial  history  of  Syracuse  in  the  Roman  period,  from  the  same 
sources. 

21.  Write  a  report  on  the  commerce  and  civilization  of  one  of  the 
cities,  using  Holm,  vol.  4,  and  the  encyclopedia. 

22.  Endeavor  to  trace  the  later  history  of  one  of  these  cities,  and'  to 
discover  its  population  now,  using  the  encyclopedia  and  a  geographical 
gazetteer. 

BIBLIOGRAPHY 
See  chapter  ii. 


CHAPTER  IV 
ROMAN  PERIOD 

26.  The  Roman  state ;  Rome  not  a  commercial  city.  —  In 
entering  on  the  period  of  Roman  domination  we  need  spend 
no  time  over  the  earlier  history  of  the  city  which  came  to  rule 
the  world.  The  Romans  were  not  a  commercial  people.  Even 
in  the  last  two  centuries  B.C.,  when  Rome  extended  her  sway 
over  the  eastern  countries  which  have  already  been  noticed, 
and  subjected  a  large  part  of  the  West  as  well,  Rome  did  not 
become  a  commercial  center.  The  city  grew  to  unparalleled 
size,  it  is  true,  and  required  immense  imports  of  food  to  support 
the  population.  These  imports  came,  however,  as  taxes  and 
tribute  to  the  conquerors.  Rome  supplied  no  exports  of  con- 
siderable amount,  and  built  up  no  great  carrying  and  for- 
warding trade  such  as  would  have  made  the  city  the  center 
for  the  exchanges  of  other  people.  The  service  which  the 
Romans  gave  to  the  world  of  their  time,  and  for  which  they 
received  such  rich  reward,  was  not  economic  but  political  in 
character;  they  were  the  greatest  organizers  and  administrators 
of  antiquity,  and  by  their  skill  in  the  arts  of  war  and  govern- 
ment succeeded  in  living  on  the  labor  of  subject  peoples. 
They  were  not  mere  parasites.  They  earned  all  that  they 
received  by  one  great  contribution,  "pax  Romana,"  Roman 
peace,  which  continued  almost  unbroken  for  centuries,  and 
which  furnished  an  opportunity  for  commercial  development 
before  unknown. 

26.  Development  of  commerce  in  the  Roman  East.  —  The 
study  of  commerce  in  .the  Roman  period  resolves  itself,  as 
suggested  above,  into  a  study  of  commerce  in  the  different 
regions  of  which  the  great  Roman  state  was  composed.  In 

26 


ROMAN  PERIOD  27 

the  East  commerce  developed  on  the  lines  which  have  already 
been  described;  Alexandria  and  Antioch  continued  to  be  great 
markets  for  Oriental  wares,  coming  now  even  from  India  and 
China;  and  Carthage  remained  an  important  outlet  for  the 
African  trade.  Asia  Minor,  northern  Africa,  and  southeastern 
Europe  reached  the  very  pinnacle  of  their  historical  develop- 
ment in  the  Roman  period;  these  countries  have  never  since 
attained  to  anything  like  the  prosperity  they  then  enjoyed. 
We  shall  not  have  the  time  hereafter  to  notice  the  commerce 
of  these  regions  in  detail;  the  reader  may  take  it  for  granted 
that  merchants  struggled  strenuously  to  keep  the  place  they 
had  reached,  and  that  decline  came  slowly,  when  it  did  come 
later. 

Our  attention  must  be  directed  hereafter  mainly  to  the 
West.  It  was  there  that  the  most  important  states  of  modern 
Europe  arose,  and  there  that  commerce  grew  up  in  its  modern 
form.  Our  chief  interest  must  be  to  know  what  progress  the 
peoples  of  the  West  made  under  Roman  rule,  and  how  far 
commerce  had  developed  among  them. 

27.  Backward  condition  of  the  people  of  the  West.  —  The 
peoples  of  the  West  were  far  behind  those  of  the  East  in  civi- 
lization. They  have  sometimes  been  compared  to  the  Ameri- 
can Indians,  and  though  the  comparison  is  inexact  in  detail 
and  may  easily  mislead,  it  gives  still  a  rough  indication  of  their 
backwardness.  They  lived  more  from  the  products  of  their 
flocks  and  herds  than  from  agriculture,  when  the  Romans  came 
in  contact  with  them;  they  had  practically  no  towns,  and  no 
considerable  trade. 

The  five  hundred  years  (roughly)  of  Roman  rule  made 
some  striking  changes  in  the  Roman  provinces  of  the  West 
(modern  Spain,  France,  England;  not  Germany  or  countries 
farther  east).  It  kept  the  people  in  order,  and  gave  them  an 
opportunity  to  acquire  the  elements  of  a  higher  civilization. 
The  fact  that  modern  Spanish  and  French  are  based  on  Latin 
remains  always  a  striking  testimony  to  the  Roman  influence 
on  the  provincials. 


28 


A  HISTORY  OF  COMMERCE 


28.  Limited  influence  of  Rome  on  the  commercial  develop- 
ment of  the  West.  —  It  is  easy,  however,  to  overestimate  the 
results  of  this  influence,  especially  so  far  as  regards  economic 
progress.  Rome  gave  her  subject  peoples  of  the  West  a  chance 
at  commercial  development,  but  none  had  sought  it  and  few 
were  ready  to  profit  by  it.  The  Roman  government  con- 
structed a  system  of  military  roads,  models  of  their  kind, 
which  enabled  troops  and  messengers  to  reach  speedily  the 


The  course  of  some  of  the  roads  is  uncertain,  and  the  number  would  be  increased 
or  diminished  according  to  the  authority  followed.  The  map  gives,  however, 
a  fair  picture  of  the  Roman  road  system ;  it  was,  evidently,  not  so  extensive 
as  our  modern  railroad  system. 

different  provinces.  Romans  settled  in  the  provinces  as  officials 
or  private  gentlemen,  and  Roman  culture  was  acquired  by  the 
wealthy  provincials;  cities  and  large  landed  estates  formed 
centers  of  industry  and  exchanged  manufactured  products  for 
the  raw  materials  of  the  surrounding  districts. 

The  roads,  however,  seem  to  have  served  mainly  Roman 
purposes,    and   the   cities   and   culture   depended   mainly   on 


ROMAN  PERIOD  29 

Roman  influence  for  their  support.  The  mass  of  the  people 
remained  passive,  and  advanced  slowly.  Most  of  them  lived 
by  agriculture  in  the  country  districts,  producing  the  things 
necessary  for  their  own  subsistence  and  a  small  surplus  for  the 
Roman  tax-gatherer;  they  received  for  their  surplus  no  wares 
which  would  have  formed  the  basis  of  commerce.  However 
much  Rome  did  to  efface  the  differences  of  race,  language,  and 
national  tradition,  such  differences  remained  to  hinder  com- 
merce; and  peoples  were  still  separated  by  great  distances  and 
by  serious  physical  barriers.  The  commercial  development  of 
the  West,  though  it  may  seem  great  in  comparison  with  con- 
ditions in  the  following  period  of  disorder,  was  very  limited 
even  at  the  height  of  Roman  power. 

29.  Decline  of  Roman  power  and  of  commerce  in  the 
West.  —  The  time  came  soon  when  the  provincials  could  no 
longer  look  to  Rome  for  protection  and  stimulus.  In  the 
third  century,  A.D.,  the  Roman  government  began  to  go  to 
pieces.  It  lacked  the  force  to  repress  internal  revolts  in  the 
provinces,  and  to  repel  the  inroads  of  barbarians  on  the  fron- 
tiers. The  process  of  decline  had  already  proceeded  far  before 
the  "Fall  of  Rome"  (476),  when  even  the  shadow  of  authority 
passed  from  the  Roman  Emperor  of  the  West.  The  remnants 
of  Roman  rule  centered  henceforth  about  the  eastern  capital , 
Constantinople.  In  the  West  barbarian  chieftains  established 
government  of  a  kind  on  the  fragments  of  the  Roman  state, 
but  endeavored  in  vain  to  follow  the  models  which  the  Romans 
had  set  them.  The  motives  to  commerce  grew  weaker  as 
Roman  culture  disappeared,  and  the  obstacles  to  commerce 
increased  rapidly  with  the  decline  in  public  order.  Brigandage 
and  piracy  became  more  profitable  than  honest  industry;  roads 
and  bridges  deteriorated;  the  course  of  rivers  was  obstructed. 
Even  a  great  ruler  like  Charlemagne,  who  had  himself  crowned 
Emperor  in  800,  could  do  little  to  stay  the  process  of  decline, 
and  weaker  successors  could  do  still  less.  The  last  remnants 
of  the  Roman  organization  seemed  to  have  passed  away,  and 
the  European  world  passed  into  the  "Dark  Ages." 


30  A  HISTORY  OF  COMMERCE 


QUESTIONS   AND  TOPICS 

1.  Endeavor  to  verify  the  statements  in  the  text  by  studying  the 
descriptions  of  Roman  commerce  in  the  current  Roman  histories.     Ask 
the  following  questions  of  them.     What  wares,  beside  manuscript  books 
and  a  few  other  items  of  no  great  importance,  did  the  people  of  Rome 
produce  for  export?     What  wares  beside  food  for  the  people  and  luxuries 
for  the  rich  did  they  import? 

2.  Show  how  the  taxes  and  tribute  from  conquered  provinces  can  be 
regarded  as  war-insurance. 

3.  Write  a  report  on  the  civilization  and  commerce  of  one  of  the 
provinces  of  the  Roman  Empire.     [See  Mommsen,  Provinces,  esp.  vol.  1, 
chap.  7,  Greek  Europe;  chap.  8,  Asia  Minor;  vol.  2,  chap.  12,  Egypt;  chap. 
13,  the  African  Provinces.] 

4.  Write  a  similar  report  on  one  of  the  provinces  of  the  West.     [Vol. 
1,  chap.  2,  Spain;  chap.  3,  Gaul;  chap.  4,  Germany;  chap.  5,  Britain.] 

5.  Study  the  civilization  of  Roman  Britain,  distinguishing  carefully 
the  life  of  the  upper  (Roman)  classes,  and  the  life  of  the  common  people. 
What  effect  would  this  contrast  of  classes  have  on  the  extent  and  charac- 
ter of  commerce  in  the  Roman  period?     [Consult  manuals  of  English 
history.] 

6.     Study  the    economic    and  political  factors  in  the  fall  of  Rome. 
[Cunningham,  West,  civ.,  vol!  1,  p.  170  ff.;  Adams,  Civ.,  chap.  4.] 

7.   Compare  the  fall  of  Rome  with  the  growth  of  political  corruption 
in  some  modern  cities,  as  affecting  the  prosperity  of  commerce. 

BIBLIOGRAPHY 
See  chapter  ii. 


PART    II.— MEDIEVAL    COMMERCE 

CHAPTER  V 
CONDITIONS  ABOUT  THE  YEAR  1000 

30.  Political  conditions  affecting  commerce;  the  modern 
system  of  government.  —  The  reader  who  studies  the  history 
of  commerce  in  the  medieval  period  faces  a  system  of  govern- 
ment entirely  different  from  that  of  modern  times,  VvLich  he 
must  understand  before  he  can  appreciate  the  peculiar  con- 
ditions of  commerce  then.  We  can  illustrate  the  modern 
method  of  government  by  taking  a  country,  say  France,  for 
an  example.  We  wish  to  understand  the  relations  of  the 
capital,  Paris,  to  other  parts  of  the  country,  say  the  district 
around  Bordeaux,  in  the  southwest  corner.  An  observer  of 
this  country  will  find  that  Paris  and  Bordeaux  are  united  by 
different  means  of  communication  and  transportation,  tele- 
graphs and  posts,  railroads,  highways  and  canals,  which  are 
constantly  employed  in  the  service  of  government.  On  the 
path  from  the  province  to  the  capital  go  the  reports  of  the 
officials  who  are  in  charge  of  the  government  of  Bordeaux; 
and,  if  they  fail  in  their  duties,  petitions  and  complaints  from 
private  citizens,  asking  relief,  will  take  the  same  path.  By 
this  path,  also,  the  taxes  collected  at  Bordeaux  will  stream  to 
the  treasury  at  Paris,  to  be  employed  in  maintaining  the 
government.  Part  of  these  taxes  will  be  expended  at  Paris, 
to  support  the  officials  who  live  in  the  capital,  the  central 
army,  etc.  Part,  however,  must  be  used  to  fulfil  the  local 
needs  of  Bordeaux;  and  on  the  road  from  the  capital  to  the 
province  we  shall  find  money  and  wares,  going  as  salaries  to 
officials,  appropriations  for  public  works  and  the  like.  On 
this  road,  furthermore,  we  shall  find  a  stream  of  messages, 
sent  by  the  central  government  to  its  local  subordinates, 

31 


32  A  HISTORY  OF  COMMERCE 

directing  them  in  their  work;  these  messages  will  answer  the 
reports  of  officials  and  the  petitions  and  complaints  of  subjects. 

31.  Impossibility  of  applying  modern  methods  of  govern- 
ment in  the  period  after  the  fall  of  Rome.  —  The  system  of 
government,  thus  roughly  outlined,  was  the  system  used  in 
the  period  when  Rome  was  still  strong.     But  when  the  power 
of  Rome  declined  it  became  constantly  more  difficult  to  main- 
tain a  system  of  the  kind;  every  obstacle  to  the  free  passage 
of  men  and  wares  weakened  the  hold  of  the  government  on  its 
provinces.     The  roads  grew  worse,  and  while  they  were  still 
passable  the  danger  of  traversing  them  increased,  so  that  the 
expense  of  maintaining  this  government  became  prohibitive. 
The  reports  from  officials  and  the  petitions  from  subjects  were 
delayed  or  lost;  only  a  small  part  of  the  local  taxes  reached 
the  treasury  at  the  center.     The  central  government,  on  its 
side,  found  that  it  had  no  longer  the  means  to  pay  the  bills 
for  salaries  and  public  works  in  the  provinces,  and  found  that 
its  commands  were  not  received  there,  or  were  not  obeyed, 
because  the  government  could  no  longer  send  officials  and 
troops  to  force  obedience. 

32.  The  feudal  system ;  rise  and  character.  —  The  time  came, 
finally,  when  the  government  had  to  recognize  publicly  the 
change  in  conditions,  and  to  adopt  a  system  of  quite  a  differ- 
ent kind,  known  as  the  feudal  system.     In  substance  it  told 
the  man  who  before  had  been  a  salaried  official  that  it  could 
no   longer  pay  salaries,   and  that  he  must  support  himself 
henceforth  from  the  revenues  of  land  which  would  formerly 
have  gone  to  it  as  taxes.     It  maintained  still  a  nominal  supe- 
riority, and  exacted  from  the  feudal  lords  who  now  assumed 
the  responsibility  of  government  certain  payments  for  general 
public  service,  occasionally  a  sum  of  money  and  more  fre- 
quently personal  service  of  a  military  or  judicial  kind.     Prac- 
tically, however,  the  state  had  split  into  little  pieces;  the 
central  government  had  lost  the  right  even  to  nominate  the 
successor  of  an  official,  and  each  was  succeeded  in  the  duties 
and  profits  of  government  by  his  son,  as  though  he  had  been 


33 

a  petty  king.  It  is  impossible  to  state  accurately  the  number 
of  little  governments  of  this  kind  that  existed  in  the  different 
countries  of  Europe;  in  France,  in  the  tenth  century,  it  is 
supposed  to  have  exceeded  10,000.  The  character  ofgovern- 
ment  varied  greatly,  of  course,  according  to  local  conditions, 
not  only  in  different  countries  but  in  different  parts  of  the 
same  country,  but  it  was  everywhere  extremely  low  when 
measured  by  modern  standards.  This  will  be  apparent  as  we 
survey  the  conditions  under  which  commerce  was  carried  on 
in  the  period  known  as  the  Dark  Ages. 

33.  Difficulties  and  dangers  of  transportation.  —  Attempt 
was  made  to  maintain  the  roads,  which  of  course  are  essential 
to  trade  by  sea  as  well  as  by  land,  by  making  the  proprietors 
through   whose   land   they   ran   responsible  for  their   repair. 
Many  of  the  proprietors  managed  to  escape  contribution,  and 
what  work  was  done  was  largely  wasted,  through  ignorance 
and  lack  of  proper  superintendence.     We  shall  see  that  even 
in  later  periods  the  roads  were  bad;  in  this  early  time  they 
were  so  bad  that  they  seem  to  have  been  mere  tracks,  of 
service  to  passengers  on  foot  or  on  horseback,  but  of  little  use 
for  wagon  traffic. 

The  merchant  suffered  even  more,  however,  from  bad  men 
than  from  bad  roads.  Government  was  so  weak  that  robbery 
was  common;  people  were  so  ignorant  of  everything  outside 
the  narrow  sphere  of  local  interests  that  they  suspected  every 
stranger,  and  too  often  with  reason.  There  is  a  whole  series 
of  English  laws,  beginning  about  700  and  continuing  for 
centuries,  of  which  this  is  an  early  example  "If  a  man  come 
from  afar,  or  a  stranger,  go  out  of  the  highway,  and  he  then 
neither  shout  nor  blow  a  horn;  he  is  to  be  accounted  a  thief, 
either  to  be  slain  or  to  be  redeemed." 

34.  Restrictions  imposed  to  insure  security.    The  market.  — 
The  dangers  of  travel  required  a  merchant  to  go  in  company 
with  others,  and  the  danger  that  a  merchant  would  himself 
turn   robber   made  it   necessary  for  him  to  subject   himself 
constantly  to  public  supervision,  and  to  get  residents  who 

3 


34  A  HISTORY  OF  COMMERCE 

would  act  as  sureties  for  his  good  behavior.  In  England,  even 
in  the  eleventh  century,  the  central  government  thought  it 
necessary  to  pass  a  law  "that  every  man  above  twelve  years 
of  age  make  oath  that  he  will  neither  be  a  thief  nor  cognizant 
of  theft."  Such  a  general  statute  would  surely  be  of  little 
use. 

Many  other  statutes  of  a  more  specific  nature  were  passed, 
which  may  have  helped  to  repress  robbery,  but  which  must 
have  hampered  trade  at  the  same  time.  The  idea  in  general 
was  to  force  a  man  to  make  his  purchases  in  public,  so  that 
if  he  appeared  at  home  with  new  wares  he  could  get  witnesses 
to  prove  that  he  came  honestly  by  them.  Cattle  formed  a 
large  part  of  the  personal  property  in  early  times,  and  as  these 
could  readily  be  stolen,  many  laws  were  passed  restricting  the 
trade  in  cattle.  Other  things  were  included  in  the  restriction, 
however,  as  the  need  of  protecting  commerce  became  more 
apparent.  In  England,  in  the  tenth  century,  a  man  was  not 
allowed  to  buy  or  sell  any  goods  above  the  value  of  twenty 
pence,  unless  he  did  it  within  a  town  where  a  public  official 
and  witnesses  could  legitimate  the  bargain.  In  this  practice 
is  found  the  origin  of  the  market,  a  medieval  institution  of 
which  more  will  be  said  later.  A  market  was  a  place  appointed 
by  the  government,  where  bargains  could  properly  be  made; 
and  only  small  exchanges  of  household  produce  could  be  made 
outside  it,  in  the  open  country.  Beginning  in  the  need  that 
was  felt  to  prevent  thieving  it  developed  as  a  public  institution, 
which  the  people  found  it  profitable  to  extend  as  a  means  of 
collecting  tolls  and  of  regulating  internal  trade. 

35.  Society  organized  to  exist  with  the  minimum  of  com- 
merce; the  medieval  village.  —  The  striking  and  important 
feature  in  the  life  of  European  peoples  at  this  period  was  not 
the  large  amount  of  commerce  carried  on,  but  the  small  amount. 
The  people  were  organized  on  a  system  which  enabled  them 
to  support  life  with  the  least  commerce  possible.  Instead  of 
being  concentrated  in  towns,  they  were  isolated  in  little  groupsr 
often  called  manors,  one  of  which  would  be  composed  often 


CONDITIONS  ABOUT  THE  YEAR  1000  35 

of  less  than  100  people,  who  got  their  living  from  the  square 
mile  or  so  of  land  surrounding  them.  It  is  not  necessary  here 
to  discuss  the  social  and  political  life  of  these  little  groups, 
though  it  is  proper  to  remark  that  often  some  of  the  inhabitants 
were  slaves,  and  many  more  were  only  half-free,  like  the 
Russian  serfs  of  the  nineteenth  century. 

36.  Self-sufficiency  of  the  villages;  low  stage  of  the  arts  of 
production.  —  The  economic  life  of  these  village  groups  is  the 
side  in  which  we  are  interested,  and  the  chief  point  in  that 
was  the  self-sufficiency  of  each  group.     A  village  tried  to  pro- 
duce everything  that  it  wanted,  to  be  free  from  the  uncer- 
tainty and  expense  of  trade.     We  find,  then,  that  almost  all 
the  people  in  a  village  were  agriculturists,  and  these  raised 
the  necessary  food  supply  by  methods  which  were  always 
crude,  and  were  often  very  cumbersome  and  wasteful.     The 
stock  was  of  such  a  poor  breed  that  a  grown  ox  seems  to  have 
been  little  larger  than  a  calf  of  the  present  day,  and  the  fleece 
of  a  sheep  weighed  often  less  than  two  ounces.     Many  of  the 
stock  had  to  be  killed  before  winter,  as  there  was  no  proper 
fodder  to  keep  them,  and  those  that  survived  were  often  so 
weak  in  the  spring  that  they  had  to  be  dragged  to  pasture  on 
a  sledge.     Insufficient  stock  meant  insufficient  manure,  and 
though  the  fields  were  allowed  to  lie  fallow  every  third  year 
they  were  exhausted  by  constant  crops  of  cereals,  and  gave  a 
yield  of  only  about  six  bushels  of  wheat  an  acre,  of  which  two 
had  to  be  retained  for  seed. 

Not  only  the  food  but  nearly  everything  else  had  to  be 
raised  where  it  was  to  be  consumed.  Houses  were  constructed 
of  materials  from  the  forest,  clothes  were  made  out  of  flax 
and  wool  from  the  village  fields,  furniture  and  implements 
were  made  at  home.  Nearly  every  village  had  a  mill,  usually 
run  by  water,  to  grind  its  meal  or  flour;  some  villages  had  a 
smith  or  carpenter;  few  special  artisans  beside  those  suggested 
were  to  be  found  in  the  ordinary  manor. 

37.  Evils  resulting  from  the  lack  of  commerce.  —  Before  we 
proceed  to  describe  the  growth  of  European  commerce  from 


36  A  HISTORY  OF  COMMERCE 

such  origins  it  will  be  well  to  stop  and  consider  the  results  of 
a  system  which  was  based  on  the  lack  of  commerce.  With 
regard  to  the  main  product,  food  staples,  the  result  was  an 
alternation  of  waste  and  want.  A  good  year  brought  a  surplus 
for  which  there  was  no  market  outside  the  village,  and  which 
could  not  be  worked  up  inside  for  lack  of  manufacturing  skill 
and  implements.  A  bad  harvest,  on  the  other  hand,  meant 
serious  suffering,  because  there  was  no  opportunity  to  buy 
food  supplies  outside  the  manor  and  bring  them  to  it.  Nearly 
every  year  was  marked  by  a  famine  in  one  part  or  another  of 
a  country,  and  famine  was  often  followed  by  pestilence.  Dis- 
eases now  almost  unknown  in  the  civilized  world,  like  leprosy 
and  ergotism  or  St.  Anthony's  fire,  were  not  infrequent.  The 
food  at  best  was  coarse  and  monotonous;  the  houses  were 
mere  hovels  of  boughs  and  mud;  the  clothes  were  a  few  gar- 
ments of  rude  stuff.  Nothing  better  could  be  procured  so  long 
as  everything  had  to  be  produced  on  the  spot  and  made  ready 
for  use  by  the  people  themselves.  Finally,  these  people  were 
coarse  and  ignorant,  with  little  regard  for  personal  cleanliness 
or  for  moral  laws,  and  with  practically  no  interests  outside  the 
narrow  bounds  of  the  little  village  in  which  they  lived. 

38.  Exceptional  instances  of  higher  organization  of  indus- 
try. —  These  conditions  existed  all  over  western  Europe,  and 
may  be  taken  as  typical  of  the  period  about  the  year  1000. 
Though  they  determined  the  commerce,  or  better  the  lack  of 
commerce,  at  this  time,  they  were  not  absolutely  universal. 
Great  feudal  princes  and  great  monasteries  owned  each  a 
considerable  number  of  villages  or  manors,  and  tried  to  intro- 
duce a  more  advanced  economic  system  among  them.  A 
great  lord  would  have  his  shoemaker  and  tailor,  his  saddler, 
swordsmith,  etc.;  and  would  have  a  considerable  number  of 
women  gathered  in  a  sort  of  factory  making  clothes.  It  is 
noteworthy,  however,  that  the  difficulties  of  transportation 
were  so  great  that  for  a  long  time  to  come  it  was  not  prac- 
ticable to  concentrate  the  food  supplies  of  a  large  group  of 
manors  in  one  place,  and  the  owner  would  have  to  go  to  the 


CONDITIONS  ABOUT  THE  YEAR  1000  37 

food  instead  of  having  it  brought  to  him.  So  we  read  of  the 
kings  and  princes  being  always  on  the  road,  traveling  with 
court  and  retinue  from  one  manor  to  another,  eating  up  the 
surplus  that  had  accumulated  and  then  moving  on. 

39.  Common  wares  of  commerce  in  the  period  of  the  manor. 
—  Absolute  self-sufficiency  was  impossible;  it  was  the  ideal  at 
which  the  managers  of  the  manor  aimed,  but  there  were  few 
manors  which  could  supply  all  the  necessaries  of  life.     The 
list,  however,  of  articles  which  had  to  be  procured  by  com- 
merce with  the  outside  world  was  small.     Salt  was  one  item, 
of  special  importance  as  it  was  so  difficult  to  keep  live  stock 
through  the  winter,  and  the  animals  had  to  be  killed  and 
salted   down.     Iron   was   necessary  for   various   implements, 
though  it  was  so  expensive  that  it  was  spared  in  every  possible 
way.     Other    articles   had   to   be   bought  as  occasion  arose, 
stones  for  the  mill  or  tar  to  keep  the  murrain  from  sheep. 
These  wares  were  essential  to  existence;  by  channels  so  obscure 
that  they  cannot  now  be  traced  they  reached  the  places  where 
they  were  wanted,  and  were  purchased  with  part  of  the  manor's 
scanty  surplus.     Cattle  and  horses  formed  also,  as  is  natural, 
common  objects  of  exchange. 

40.  The  slave  trade  in  Europe.  —  One  ware  which  had  long 
been  an  object  of  commerce  was  of  especial  importance  in  the 
period  just  after  the  fall  of  Rome,  and,  indeed,  for  some  time 
later;   this  was  slaves.     The  slave  trade  extended  over  all 
Europe,  and  had  great  markets  on  the  Mediterranean,  the 
North,  and  the  Baltic  seas.     Merchants  drove  troops  of  slaves 
in  chains  from  one  country  to  another,  or  exported  them  in 
lots  of  100  or  more.     In  the  slave  markets  of  the  Baltic  as 
many  as  700  are  said  to  have  been  put  up  for  sale  at  once. 
A  number  of  English  laws  regulated  the  slave  trade  of  the 
time.     It  seems  to  have  been  largely  confined  to  convicts,  but 
a  law  of  Alfred  provided  that  a  father  should  not  sell  his 
daughter  to  servitude  among  strange  people.     Later  the  Eng- 
lish laws  forbade  the  trade  entirely,  but  we  read  of  Bristol 
merchants  in  the  eleventh  century  who  not  only  bought  slaves 


38  A  HISTORY  OF  COMMERCE 

all  over  England  for  export  to  Ireland,  but  bred  them  as  well; 
and  the  trade  persisted  in  various  sections  even  later. 

41.  Distant  commerce  confined  to  rare  luxuries.  —  Under 
conditions  such  as  these  the  term  "foreign  commerce"  in  its 
modern  sense  is  meaningless.    The  areas  which  now  form  the 
countries  of  Europe  did  not  specialize  in  the  production  of 
different  wares,  so  that  we  can  trace  a  regular  exchange  of 
products  between  them.    Most  of  the  common  wares  of  com- 
merce circulated  inside  a  restricted  area.    Only  the  rich  could 
afford  to  pay  for  the  transportation  of  wares  over  any  dis- 
tance, and  they  would  spend  their  money  only  for  valuable 
luxuries.     The  dignitaries  of  the  church,  by  reason  of  their 
higher  culture  and  connection  with  a  universal  organization, 
created  a  demand  for  a  few  foreign  wares,  and  the  governing 
classes  wanted  some  things  which  could  not  be  produced  at 
home.     Wines  and  spices  were  brought  up  from  southern 
Europe,  along  the  river  routes  and  over  the  passes  of  the  Alps, 
and  furs  were  brought  down  from  the  North. 

Distant  sea  voyages  were  still  uncommon.  An  English 
law  of  about  900  provided  that  "if  a  merchant  thrived  so  that 
he  fared  thrice  over  the  wide  sea  by  his  own  vessel"  he  might 
be  promoted  to  a  higher  social  class;  and  later  laws  refer  to 
merchant  ships  again.  The  Scandinavians  have  left  records- 
of  adventurous  voyages  to  the  North  and  West,  and  a  vast 
number  of  silver  coins  found  in  Russia  and  the  Baltic  countries 
shows  that  a  land  trade  with  southwestern  Asia  persisted  in 
the  period  of  which  we  treat.  It  is  only  toward  the  close  of 
this  period,  however,  that  we  begin  to  get  details  about  distant 
commerce,  and  can  see  that  it  is  firmly  established.  The 
Institutes  of  London,  issued  in  the  eleventh  century,  and 
regulating  the  commerce  of  the  town,  mention  ships  coming: 
from  Flanders,  from  Rouen  and  other  places  in  France,  and 
from  Germany.  Foreign  merchants  bought  wool  and  pigs,, 
and  sold  wine,  furs,  spices,  gloves,  and  fish. 

42.  Character  of  the  merchant  in  the  early  Middle  Ages.  — • 
We  know  even  less  of  the  person  of  the  merchant,  in  this. 


CONDITIONS  ABOUT  THE   YEAR  1000  39 

period  (about  1000  A.D.),  than  of  the  wares  that  he  carried. 
It  is  certain,  at  any  rate,  that  the  merchant  was  not  the  spe- 
cialist that  he  afterwards  became,  but  was  a  jack-of-all-trades. 
He  might  be  wholesaler  and  retailer,  transporter  and  pedler, 
and  often  an  artisan  too.  Nothing  like  the  country  store  of 
the  present  day  existed,  and  trade  outside  the  few  centers 
where  markets  had  been  established  was  carried  on  by  pedlers, 
who  carried  their  wares  on  the  back  or  on  a  pack  animal. 
Every  merchant  was  sure  to  be  something  of  a  soldier,  as  he 
was  thrown  largely  on  his  own  resources  for  self-defence;  and 
he  often  assumed  the  garb  of  a  missionary  or  pilgrim  to  get 
the  help  of  the  church  in  carrying  on  his  trade.  The  pilgrim 
was  exempt  from  many  burdens  laid  on  the  ordinary  traveler 
or  merchant,  and  though  this  exemption  had  later  to  be 
abolished,  because  it  was  so  frequently  abused,  it  seems  to 
have  been  of  great  use  in  helping  commerce  through  its  early 
stages. 

QUESTIONS  AND  TOPICS 

1.  Modern  France  has,  approximately,  an  area  of  200,000  square 
miles.     Calculate  the  average  size  of  the  feudal  state  about  the  year 
1000r  and  compare  it  with  the  county  in  which  you  live. 

2.  Can  you  suggest  anything  in  cow-boy  life  on  the  plains  of  the 
West  reminding  you  of  feudal  conditions,  when  the  State  was  weak? 

3.  What  district,  known  to  you,  has  the  least  commerce  with  the 
outside  world? 

4.  How  does  the  yield  of  wheat,  as  given  in  the  text,  compare  with 
the  yield  in  different  parts  of  the  U.  S.?     [See  Abstract  of  the  United 
States  Census.] 

5.  Show  why  the  lack  of  commerce  requires  small  groups  of  people 
to  produce  everything  for  themselves,  and  why  this  self-sufficiency  in- 
volves a  low  standard  of  living. 

6.  How  does  commerce  remedy  the  waste  and  want  which  are  charac- 
teristic of  self-sufficiency?     Why  cannot  people  plan  to  produce  just 
enough  food? 

7.  Report  on  the  wares  and  workmen  collected  on  the  estates  of  a 
great  king.     [Falkner,  Statistical  documents  of  the  Middle  Ages,  Phila- 
delphia, 1896,  10  cents,  pp.  2-5.] 

8.  Name  some  wares,  important  in  the  stock  of  even  the  smallest 
country  store,  which  did  not  appear  in  commerce  in  the  period  of  the 


40  A  HISTORY  OF  COMMERCE 

manor.    Show  the  necessity  of  each  one  of  the  wares  mentioned  in  the 
text. 

9.  Why  could  a  profitable  commerce  in  slaves  be  carried  on  when 
other  wares  did  not  pay  the  merchant? 

10.  What  are  the  luxuries  which  a  trader  now  can  afford  to  pack  into 
the  uncivilized  districts  of  Africa  and  America? 

BIBLIOGRAPHY 

References  on  the  rise  and  character  of  feudalism  may  be  found  in 
many  manuals  of  European  history;  among  others  Emerton,  Introduction, 
236;  Mediaeval  Europe,  477;  Robinson,  Middle  Ages,  119.  Brief  accounts, 
mainly  for  the  student  of  political  history,  may  be  found  in  the  above, 
in  Adams,  European  Hist.,  185-191;  and  in  the  same  author's  *  Civiliza- 
tion, chap.  9.  The  best  account  of  the  feudal  system  in  English  is  Seig- 
nobos,  **  Feudal  regime,  N.  Y.,  Holt,  1903. 

Most  of  the  books  describing  conditions  in  this  period  treat  them 
either  from  the  political  or  the  agrarian  standpoint;  the  writer  knows 
nothing,  suitable  for  student's  reading,  discussing  the  origins  of  commerce 
at  this  time.  See,  therefore,  Cunningham,  Growth,  vol.  1,  book  1,  or  the 
smaller  manuals  on  English  economic  history. 


CHAPTER  VI 
TOWN  TRADE 

43.  Significance  of  towns  in  the  economic  organization; 
decline  of  the  Roman  towns.  —  In  the  latter  part  of  the  Middle 
Ages,  beginning  after  the  year  1000,  a  striking  change  took 
place  in  the  life  of  Europe;  the  people  advanced  so  rapidly 
in  their  economic  and  political  organization  that  we  can  make 
this  a  new  era  in  their  history.  It  will  be  necessary  to  notice 
the  important  changes  in  detail,  but  we  can  summarize  them 
now,  from  the  economic  standpoint,  by  saying  that  people 
advanced  from  the  stage  of  the  village  or  manor  to  that  of 
the  town.  A  town,  as  the  word  will  be  used  here,  means  a 
group  of  at  least  several  hundred,  perhaps  several  thousand 
people,  settled  closely  together,  and  maintaining  themselves 
in  large  part  by  manufactures  and  trade.  Such  towns  had 
existed,  as  noted  above,  in  the  Roman  Empire  of  the  West. 
In  Roman  Gaul  (modern  France)  there  were  over  one  hundred 
of  them.  They  depended  for  their  existence,  however,  on  the 
stimulus  of  Roman  culture,  and  on  the  security  which  good 
government  could  afford  to  their  trade.  A  manufacturing 
class  evidently  could  not  eat  the  wares  it  made,  and  needed  the 
chance  to  exchange  them  for  food  products  from  the  country 
districts  if  it  was  to  maintain  itself.  In  the  period  before, 
during,  and  after  the  German  invasions  the  chance  for  exchange 
grew  steadily  less,  as  we  have  seen.  Some  of  the  towns  were 
entirely  destroyed  in  the  period  of  disorder  which  followed  the 
fall  of  the  Roman  government.  London,  for  instance,  which 
had  been  a  flourishing  town  under  Roman  rule,  must  have 
become  a  mere  heap  of  rubbish,  for  when  it  was  rebuilt  in 
later  times  no  attempt  was  made  to  follow  the  lines  of  the  old 

41 


42  A  HISTORY  OF  COMMERCE 

streets,  and  new  streets  were  laid  out  over  the  ruins  of  former 
houses.  When  a  town  was  not  actually  destroyed  it  ceased 
to  live;  the  inhabitants  had  to  take  to  agriculture  to  support 
themselves,  and  the  town  shrank  to  a  mere  village,  which 
could  not  be  distinguished  from  the  manors  about  it.  Of 
more  than  500  modern  French  cities  scarcely  80  can  be  traced 
back  to  the  Roman  period,  and  all  of  these  lost  their  identity 
as  towns  and,  became  simple  villages  in  the  intervening  time. 

44.  Rise  of  towns  after  1000;  conditions  determining  their 
location.  —  We  read  of  towns  in  Europe  before  the  year  1000 
but  they  scarcely  deserve  the  name;  they  were  rather  the 
germs  from  which  towns  were  later  to  spring.     Considerable 
numbers   of  people  would   collect   in  the  place  where  some 
great  feudal  lord  spent  most  of  his  time,  or  where  a  monastery 
had  been  founded;  garrisons  would  be  established  at  places 
suitable  for  military  operations.     We  must  regard  such  groups, 
however,  as  supported  by  taxation  rather  than  by  the  trade 
of  individuals,  from  which  most  urban  groups  arise.     Trade 
of  this  kind  became,  however,  so  considerable  after  the  year 
1000  that  real  towns  grew  up  in  constantly  increasing  numbers. 
Their  position  was  determined  by  two  important  conditions  of 
existence,  political  protection  and  the  chance  for  profitable 
trade.     People  found  the  former  by  nestling  under  the  walls 
of  some  castle  or  monastery;  the  many  French  towns  which 
bear  the  name  of  some  saint  show  how  much  the  protection 
of  the  church  was  prized.     The  latter  object  was  generally 
attained  by  founding  the  town  at  some  break  in  a  line  of 
transportation,  where  goods  had  to  be  transshipped  and  where 
merchants  would  naturally  congregate  to  rest  and  exchange 
their  wares  (cf.  Ox-ford,  Cam-bridge,  etc.).     We  find  the  most 
considerable  towns,  therefore,  along  the  seacoast  and  rivers, 
and  at  breaks  or  intersections  of  the  land  routes. 

45.  Development  of  manufacturing  in  the  towns.  —  The 
rise  of  the  towns  brought  with  it,  as  has  been  suggested,  a 
new  era  in  manufactures.     In  the  ordinary  village  it  did  not 
pay  men  to  specialize  in  the  production  of  wares,  as  the  market 


TOWN  TRADE  43 

was  so  small.  A  shoemaker,  for  instance,  could  not  make  a 
living  by  selling  50  or  100  pairs  of  shoes  a  year.  If  we  think, 
however,  of  a  village  growing  into  a  town  surrounded  by  a 
considerable  country  population,  we  see  that  the  market  has 
widened  into  an  area  of  size  sufficient  to  support  a  number  of 
specialists.  Manufacturing  became  a  profession  to  which  men 
devoted  most  of  their  time.  A  man  could  learn  his  trade 
much  more  thoroughly,  and  could  afford  to  make  the  tools 
which  would  enable  him  to  exercise  it  most  efficiently.  The 
result  was  an  increase  in  production  which  enabled  the  people 
on  a  given  area  to  live  far  more  comfortably  than  they  had 
done  before. 

46.  Effect  of  the  towns  in  improving  the  conditions  in  the 
country.  —  This  movement  was  bound  to  change  the  condi- 
tions of  life  in  the  country  districts.  The  people  there  were 
freed  from  the  necessity  of  devoting  part  of  their  time  to 
work  wThich  they  never  did  well;  they  could  apply  most  of 
their  energy  to  agriculture,  and  could  use  the  surplus  crop 
which  they  thus  obtained,  for  a  profitable  exchange  with  the 
artisans  of  the  town.  The  growth  of  towns  affected  them  in 
another  wray.  In  the  purely  manorial  period  a  serf  could  not 
better  his  condition  by  running  away;  he  had  nowhere  to  go 
except  to  other  manors  like  the  one  he  had  left,  where  his 
condition  might  actually  be  worse  than  before.  In  the  towns, 
however,  practically  all  the  population  were  free;  the  artisans 
were  numerous  and  intelligent  enough  to  provide  for  their 
own  protection,  and  did  not  need  to  subject  themselves  to  a 
lord.  The  towns  were  islands  of  freedom  in  a  sea  of  serfdom 
or  of  half-freedom.  The  custom  established  itself  that  a  serf 
who  could  escape  from  his  lord,  and  who  lived  a  year  and  a 
day  within  the  walls  of  a  town,  became  a  free  man,  and  could 
not  be  reduced  to  his  former  position.  Landlords  found  that 
they  must  bid  against  the  attractions  of  the  town  if  they 
were  to  keep  the  laborers  in  the  country,  and  agreed  to  lighten 
their  burdens  if  they  would  stay.  Many  influences  worked 
together,  and  the  results  were  modified  by  many  factors. 


44  A  HISTORY  OF  COMMERCE 

especially  of  a  political  kind,  in  various  countries,  but  the 
upward  movement  of  the  country  population  was  general 
throughout  western  Europe.  Free  men  produced  more  than 
serfs,  and  this  was  another  influence  increasing  the  surplus  of 
the  country  districts,  and  furthering  trade  thereby. 

47.  The  "foreign"  trade  of  this  period  was  that  between 
towns,  even  in  the  same  country.  —  The  student  who  has 
begun  the  history  of  commerce  with  the  notion,  as  common  as 
it  is  erroneous,  that  the  foreign  trade  of  a  country  is  more 
important  than  its  internal  trade,  and  who  is  impatient  to 
arrive  at  the  description  of  this  foreign  trade,  will  be  disap- 
pointed to  learn  that  even  in  the  latter  part  of  the  Middle 
Ages  it  scarcely  existed  in  the  modern  sense.  We  mean  now 
by  foreign  trade  that  between  states  —  between  the  United 
States  and  Germany,  for  example.  In  the  manorial  period, 
as  has  been  suggested,  foreign  trade  was  rather  that  which 
existed  between  manors.  In  the  period  under  discussion  it 
was  that  which  existed  between  towns.  The  towns  existing 
inside  the  boundaries  of  a  modern  European  country  did  not, 
it  is  true,  differ  as  much  among  themselves,  in  their  products, 
as  they  differed,  taking  them  altogether,  from  the  towns  of 
another  country.  But  the  expense  of  transportation  restricted 
most  trade  still  to  a  comparatively  small  radius,  and  the  town, 
rather  than  the  country,  was  the  natural  trading  unit.  The 
radius  of  profitable  trade,  for  most  articles,  was  so  small  that  an 
English  town  would  have  its  most  important  commercial  rela- 
tions with  the  other  English  towns  rather  than  with  the  towns 
of  foreign  countries.  The  town,  moreover,  was  the  unit  for 
regulating  trade.  Each  town  would  have  its  own  customs 
tariff,  and  to  a  merchant  of  London  it  made  little  difference 
whether  he  traded  with  Southampton  or  with  Paris;  national 
regulation  was  less  important  than  municipal.  Climatic  and 
historical  influences,  it  is  true,  made  a  clearly  marked  distinc- 
tion between  the  great  sections  of  Europe,  the  North  and  the 
South,  the  East  and  the  West,  and  we  shall  have  to  take  up 
some  of  these  sections  in  detail;  but  we  shall  use  our  time 


TOWN  TRADE  45 

most  effectively  by  spending  it  not  on  the  features  of  trade 
in  the  different  modern  countries  considered  separately,  but 
on  the  characteristics  of  trade  common  to  all  the  advanced 
countries. 

48.  Small  size  of  the  medieval  towns.  —  A  point  deserving 
special  emphasis  in  the  description  of  the  medieval  town  is 
this,  that  though  the  town  comprised  practically  all  the  mer- 
cantile and  manufacturing  population  of  a  country,  and  though 
it  marked  a  tremendous  advance  over  the  village,  yet  the 
town  was  a  very  small  affair  when  measured  by  modern  stand- 
ards.    In  England  in  the  thirteenth  and  fourteenth  centuries 
the  average  size  of  the  first  class  of  towns  was  probably  below 
5,000  inhabitants;  few  had  more  than  10,000  and  many  had 
less  than  1,000.     On  the  Continent,  in  the  last  centuries  of 
the  Middle  Ages,  even  celebrated  cities  like  Nuremberg  and 
Strassburg  had  not   over  20,000  inhabitants.     Frankfort   on 
the  Main  had  scarcely  10,000,  and  other  cities  which  played  a 
great  part  in  economic  and  political  history  had  even  less. 

49.  Rural  characteristics  of  the  towns.  —  Another  miscon- 
ception must  be  guarded  against.     Though  the  town  was  a 
distinctly   industrial  group   in   comparison  with  the   village, 
yet  each  town  had  grown  from  a  village,  and  retained  many 
features  of  its  agricultural  infancy  even  to  a  late  period.     Most 
of  the  townspeople  owned  some  land  which  they  used  for 
garden  plots,  and  every  town  had  considerable  amounts  of 
arable  and  pasture  land  outside  the  walls  which  was  used  for 
the  benefit  of  the  townspeople  if  not  actually  worked  by  them. 
In  Coblentz,  in  the  thirteenth  century,  work  on  the  city  walls 
was  stopped  during  harvest  by  lack  of  labor,  and  in  London 
at  the  same  period  people  were  allowed  to  keep  pigs  "within 
their  houses,"  and  the  attempt  to  keep  vagrant  swine  off  the 
streets  was  a  distinct  failure. 

60.  General  description  of  a  town.  —  There  were  generally 
a  few  streets  that  were  broad  and  straight,  as  they  were  the 
old  highways  on  which  the  town  had  grown  up.  The  attempt 
was  made  to  keep  these  clear  of  encroaching  houses  and  shops 


46  A  HISTORY  OF  COMMERCE 

by  sending  a  horseman  through  them  once  a  year  with  a 
spear  held  horizontally,  and  by  forcing  the  removal  of  obstruc- 
tions. Most  of  the  streets,  however,  had  grown  up  from 
village  by-paths  and  were  narrow  and  crooked.  They  were 
rarely  paved,  and  as  they  served  as  the  repository  for  all 
kinds  of  offal  and  garbage  we  can  understand  why  the  towns- 
people wore  wooden  overshoes  when  they  went  out,  and  even 
the  saints  in  the  pictures  wore  painted  with  them  on.  The 
houses  were  of  wood  in  the  early  period,  and  there  were  no 
chimneys,  so  that  fires  were  frequent  and  disastrous  until  they 
forced  people  to  a  better  mode  of  building.  Travelers  in 
Europe  now  remark  upon  the  picturesque  beauty  of  the  old 
houses,  and  upon  the  merits  of  their  construction,  but  it 
should  be  noted  that  most  of  these  relics  date  from  the  very 
end  of  the  Middle  Ages  and  that  they  were  the  select  few  of 
their  time,  and  give  no  indication  of  the  character  of  the 
average  house.  Most  of  the  people  lived  in  narrow  quarters, 
dark  and  drafty,  unsuited  for  good  work  places  and  unwhole- 
some as  habitations.  Wares  were  exposed  for  sale  either  in 
the  open  market-places  which  are  so  common  in  European 
towns,  or  in  little  shops  like  pedlers'  booths  at  the  front  of 
the  house.  The  municipal  government  spent  little  or  nothing 
for  public  works  or  police  protection;  it  tried  to  make  the 
inhabitants  share  in  performing  all  absolutely  necessary  duties, 
but  succeeded  so  ill  that  all  the  towns  were  sinks  of  disease, 
and  breach  of  the  peace  was  a  constant  occurrence. 

51.  Improvement  in  conditions  in  the  later  Middle  Ages.  — 
In  the  early  period  of  the  towns,  say  before  1300,  conditions 
were  distinctly  worse  than  they  were  in  the  last  two  centuries 
of  the  Middle  Ages,  when  commerce  had  attained  such  devel- 
opment that  it  brought  great  wealth  to  some  and  comparative 
comfort  to  many  among  the  city  people.  The  town  of  Col- 
chester, in  England,  ranked  as  one  of  importance  in  1295,  but 
a  tax  roll  of  that  date  shows  a  striking  poverty  in  the  stock 
in  trade  assessed  for  taxation,  in  the  small  value  of  household 
furniture,  in  the  insignificant  amount  of  most  of  the  assess- 


TOWN  TRADE  47 

ments,  and  in  the  preponderance  of  rural  wealth  like  live 
stock  and  agricultural  produce  over  other  kinds  of  personal 
property.  In  the  fourteenth  century,  however,  the  population 
of  the  town  doubled,  and  in  the  fourteenth  and  fifteenth  cen- 
turies the  towns  of  England  in  general  freed  themselves  from 
the  worst  features  of  medieval  squalor,  accumulated  wealth,  and 
expended  large  sums  in  building  and  improvements. 

52.  Town  organization.  The  merchant  gilds.  —  Much  more 
might  be  said  about  the  general  characteristics  of  the  medieval 
town,  but  the  student  of  the  history  of  commerce  must  devote 
most  of  his  time  to  its  economic  life.  He  must  prepare  himself 
to  accept  and  understand  conditions  quite  different  from  those 
of  modern  times,  and  must  try  to  realize  how  much  the  world 
has  gained  by  the  advance  of  the  commercial  organization 
from  these  early  stages.  In  every  town  the  merchants  and 
manufacturers  were  organized  in  gilds  and  subject  to  strict 
regulation.  The  Anglo-Saxon  word  gild  means  "a  contribution 
to  a  common  fund,"  and  came  to  be  applied  to  the  society 
itself.  Societies  had  existed  in  the  first  part  of  the  Middle 
Ages  with  social  and  religious  objects,  and  about  the  eleventh 
century,  with  the  springing  up  of  trade,  commercial  gilds 
became  more  and  more  common.  It  is  supposed  that  the 
dangers  and  difficulties  of  trade  were  then  so  great  that  mer- 
chants united  in  bands  for  a  journey,  as  caravans  are  now 
formed  in  the  unsettled  countries  of  the  East.  A  collection 
of  early  gild  rules  shows  that  the  members  were  subject  to 
regulations  like  the  following:  Every  one  was  obliged  to  carry 
armor,  a  bow  and  twelve  arrows  on  penalty  of  a  fine;  they 
must  stand  by  and  help  each  other  when  they  set  out  for  a 
journey;  in  case  one  member  had  not  sold  his  wares  the  others 
must  wait  one  day  for  him;  if  one  was  imprisoned  or  lost  his 
wares  on  the  road  the  others  must  ransom  him.  The  organi- 
zation was  probably  temporary  at  first,  and  the  company  of 
merchants  dissolved  at  the  end  of  the  trip;  but  as  such  caravans 
became  more  regular  at  any  place  there  grew  the  tendency  to 
permanence  of  organization.  These  merchant  gilds  were  at 


48  A  HISTORY  OF  COMMERCE 

first  also  private  associations,  formed  voluntarily  by  the  mer- 
chants to  protect  themselves;  but  they  received  public  recog- 
nition and  became  a  part  of  the  town  government  as  the 
town  saw  the  advantage  it  could  get  from  them  in  pushing  its 
trade  and  protecting  it  against  the  efforts  of  rivals.  They 
included  not  only  professional  merchants,  but  all  who  bought 
and  sold,  including  many  artisans.  Of  the  nine  members  who 
belonged  to  the  Shrewsbury  merchant  gild  in  its  earliest  period 
two  were  fishermen  and  one  was  a  butcher. 

63.  Position  of  the  merchant  gilds ;  their  privilege  of  monop- 
oly.—  These  merchant  gilds  did  not  exist  in  all  parts  of  Europe, 
and  differed  much  from  each  other  in  the  various  regions 
where  they  did  exist.     In  England,  which  we  shall  choose  to 
illustrate  their  operation,  they  became  regular  parts   of  the 
town  government.     They  were  granted  one  most  important 
privilege,   the   exclusive   right    of   trading   within   the   town. 
"Foreigners,"  which  meant  at  this  period  the  people  from  any 
other  town,  whether  English  or  not,  were  allowed  to  bring  their 
wares  to  the  town  and  to  sell  them  wholesale,  but  they  were 
forbidden  to  purchase  wares  which  the  townspeople  wanted 
for  themselves,  and  they  were  not  allowed  to  keep  shops  and 
to  sell  retail.     The  gilds  were  not  like  modern  "trusts,"  for, 
in  the  first  place,  their  membership  was  very  broad,  and,  in 
the  second,  they  were  associations  of  men,  not  of  capital,  and 
there  was  no  division  of  profits  among  the  members.     There 
was  a  strong  feeling  of  solidarity  among  the  members,  how- 
ever,  and   competition   between  them  was  discouraged.     In 
some  places  there  was  a  law  that  if  a  gildsman  made  a  bargain 
for  any  ware  another  gildsman  had  the  right  to  share  in  it  if 
he  gave  security  that  he  could  pay  for  the  portion  he  desired. 

64.  Development  of  manufactures  in  the  towns ;  the  common 
handicrafts.  —  The  growth  of  towns  led,  as  has  been  said,  to  a 
specialization  in  manufactures  which  was  impossible  before. 
All  the  industries  that  had  been  carried  on  in  villages  were 
continued  in  towns  by  professional  craftsmen,  and  new  ones 
were  added  as  the  demand  for  them  grew.     There  were  from 


TOWN  TRADE  49 

a  dozen  to  a  score  of  handicrafts  which  supported  for  centuries 
the  staple  manufacturing  groups  of  the  towns:  butchers,  bakers, 
brewers,  blacksmiths,  goldsmiths,  coppersmiths,  masons,  car- 
penters, cabinet-makers,  wheelwrights,  skinners  or  furriers, 
tanners,  shoemakers,  saddlers  and  harness  makers,  weavers, 
dyers,  fullers,  and  tailors.  Most  of  these  terms  will  be  familiar 
to  the  reader.  Coppersmiths  took  the  place  of  the  modern 
tinsmiths  before  the  introduction  of  tinned  iron.  Fullers 
improved  the  texture  of  cloth  after  it  had  been  woven,  by 
beating  and  washing  it  with  fuller's  earth,  a  clay  which  absorbs 
the  grease  from  the  wool;  the  cloth  loses  in  length  and  breadth 
but  gains  in  body  and  thickness. 

55.  The  craft  gilds.  —  The  craftsmen,  like  the  traders,  were 
organized  in  gilds,  which  followed  shortly  after  the  rise  of 
merchant  gilds.  The  general  reason  for  their  existence  was 
the  desire  on  the  part  of  members  of  a  particular  craft  to  be 
free  to  regulate  their  professional  affairs  as  they  pleased,  and 
the  willingness  on  the  part  of  the  public  authorities  to  grant 
them  this  privilege  when  it  seemed  to  promise  better  work 
and  better  products  for  the  consumer.  To  insure  efficient 
regulation  the  grant  of  monopoly  was  necessary,  and  accord- 
ingly no  one  was  allowed  to  practise  a  craft  who  did  not  belong 
to  the  appropriate  gild.  We  shall  see  that  the  monopoly  was 
greatly  abused  in  later  times  and  was  a  serious  hindrance  to 
the  development  of  manufacturing.  At  the  start,  however, 
the  craft  gilds  were  liberal;  they  desired  a  large  number  of 
members  to  increase  their  political  importance,  and  admitted 
them  freely;  inside  the  gild  the  class  distinctions  were  at  first 
unimportant.  "The  regulations  drawn  up  by  the  crafts  aimed 
at  the  prevention  of  fraud,  and  the  observance  of  certain 
standards  of  size  and  quality  in  the  wares  produced.  Articles 
made  in  violation  of  these  rules  were  called  'false/  just  as 
clipped  or  counterfeit  coin  was  'false  money.'  For  such 
'false  work'  the  makers  were  punished  by  fines  (one  half 
going  to  the  craft,  the  other  half  to  the  town  funds),  and,  upon 
the  third  or  fourth  offence,  by  expulsion  from  the  trade. 
4 


50  A  HISTORY  OF  COMMERCE 

Penalties  were  provided,  as  far  as  possible,  for  every  sort  01 
deceitful  device;  such  as  putting  better  wares  at  the  top  of  a 
bale  than  below,  moistening  groceries  so  as  to  make  them 
heavier,  selling  second-hand  furs  for  new,  soldering  together 
broken  swords,  selling  sheep  leather  for  doe  leather,  and  many 
other  like  tricks." 

56.  Town  policy;  imports,  exports,  protection.  —  Every 
town  felt  a  community  of  interests  among  its  inhabitants  and 
a  competition  with  the  inhabitants  of  other  towns,  which 
expressed  themselves  in  a  town  policy  very  like  the  national 
commercial  policy  of  the  modern  state.  We  can  consider  this 
municipal  policy  under  several  different  heads. 

(1)  Every  town  had  what  may  be  called  a  "revenue  tariff," 
consisting  of  duties  levied  on  articles  brought  within  the  walls, 
with  additional  dues  for  the  use  of  the  market.     As  an  example 
we  can  cite  a  brief  extract  from  one  of  the  London  tariffs, 
giving  the  customs  on  victuals.     "  Every  load  of  poultry  that 
comes  upon  horse,   shall   pay  three  farthings,   the  franchise 
excepted.  ...  If  a   man  or  woman  brings   any   manner  of 
poultry  upon  horse,  and  lets  it  touch  the  ground,  such  person 
shall  pay  for  stallage  three  farthings.     And  if  a  man  carries 
it  upon  his  back  and  places  it  upon  the  ground,  he  shall  pay 
one   half-penny,   of  whatever  franchise  he  may  be."     It   is 
interesting  to  note  that  this  custom  still  survives  in  some 
European  cities  (octroi). 

(2)  Prohibitions   to   export   goods,   now   rare   in   national 
policy   (though  suggested   recently  to  keep   English  coal   at 
home),  were  common  in  the  town  policy,  when  the  supply  of 
necessaries  was  small.     "No  butcher,  or  wife  of  a  butcher, 
shall  sell  tallow  or  lard  to  a  strange  person  for  carrying  to  the 
parts  beyond  sea;  by  reason  of  the  great  dearness  and  scarcity 
that  has  been  thereof  in  the  City  of  late."     "No  person  shall 
carry  corn  or  malt  out  of  the  City,  under  penalty  of  forfeiture." 

(3)  The   modern  idea   of  protection  was  applied   by  the 
towns  in  a  number  of  different  ways.     Bread  from  one  part  of 
London  could  not  be  sold  in  another  part,  which  formed  a 


TOWN  TRADE  51 

separate  jurisdiction.  The  protection  at  this  period  was  at- 
tained more  commonly,  however,  by  aiming  it  against  persons 
rather  than  wares;  the  merchant  always  accompanied  his 
wares  at  this  period,  so  it  was  easy  to  discriminate  against 
"foreigners,"  by  making  them  pay  special  dues  from  which 
members  "of  the  franchise,"  i.e.,  townspeople,  were  excepted, 
and  by  restricting  their  chances  for  profit.  Reference  has 
been  made  above  to  the  monopoly  of  retail  trade  reserved  to 
townspeople  and  designed  to  protect  the  "  home  market." 

67.  The  market  and  its  regulations.  —  (4)  The  market  was 
an  institution  used  in  this  period  to  regulate  trade  for  the 
benefit  of  the  townspeople;  the  name  is  applied  now  especially 
to  meat  shops  simply  because  regulations  were  imposed  on 
butchers  after  other  dealers  were  freed  from  them.  The 
townspeople  were  afraid  that  traders  bringing  provisions  for 
sale  could  impose  on  their  needs  and  force  higher  prices  by 
making  separate  individual  bargains.  Therefore  they  required 
the  country  people  to  bring  their  provisions  to  a  certain  place 
(market-place)  at  a  certain  time,  that  they  might  have  the 
benefit  of  competition  among  sellers;  and  tried  to  force  the 
traders  to  sell  out  their  stock  before  the  close  of  the  market. 
That  all  the  townspeople  might  have  an  equal  chance  they 
were  forbidden  to  buy  goods  on  their  way  to  market  ("fore- 
stalling"); to  buy  larger  amounts  than  they  needed  ("en- 
grossing ") ;  and  to  buy  goods  for  retailing  before  the  ordinary 
consumers  had  supplied  their  needs  ("regrating").  After  the 
close  of  the  market  the  town  shop-keepers  looked  after  the 
needs  of  retail  trade. 

Ignorance  and  distrust  were  still  so  powerful  in  the  town 
period  that  merchants  were  subject  to  constant  supervision; 
they  had  to  employ  officials  to  weigh  and  measure  for  them, 
and  could  not  employ  brokers  to  hunt  up  customers  unless  the 
agents  were  also  officials  acting  under  oath. 

58.  Attempts  to  regulate  prices.  The  assize  of  bread.  —  The 
town  government  went  even  so  far  as  to  set  the  prices  at  which 
wares  must  be  sold.  We  are  familiar,  nowadays,  with  in- 


52  A  HISTORY  OF  COMMERCE 

stances  of  the  regulation  of  prices  by  public  authority,  as  in 
the  case  of  hack  fares.  Such  instances,  however,  are  now 
exceptional,  while  in  the  Middle  Ages  innumerable  attempts 
at  public  regulation,  covering  practically  all  wares,  were  made 
at  different  times  and  places.  Most  of  them  were  soon  given 
up,  because  they  defeated  their  own  object;  when  the  price 
was  set  too  low  the  ware  was  no  longer  offered,  and  people 
suffered  more  by  going  without  than  by  paying  the  higher 
price.  Thus  it  was  found  unwise  to  set  a  price  for  a  necessary 
like  wheat;  and  high  wheat  prices  were  allowed  to  work  their 
own  cure  by  the  inducement  they  offered  to  an  increase  in 
supply.  It  was  as  hopeless  to  set  a  fixed  price  for  bread,  but 
the  government  determined  that  at  least  the  baker  should 
not  make  improper  profits  from  the  necessities  of  his  customers. 
It  established,  therefore,  the  "assize  of  bread,"  a  sliding-scale 
which  fixed  the  weight  or  the  price  of  a  loaf  according  to  the 
market  price  of  wheat,  and  so  restricted  the  power  of  the 
baker  to  raise  his  charges  unduly.  The  same  system  was 
applied  to  ale,  and  assizes  of  this  kind  have  lasted  down  to  the 
nineteenth  century  in  some  countries. 

QUESTIONS  AND  TOPICS 

1.  Show  what  would  happen  to  our   modern  cities  if  there  were  an 
interruption  of  commerce,  either  physical   (perhaps  the  giving  out  of 
coal)  or  political  (wars,  strikes  attended  with  violence,  etc.). 

2.  Study  the  effect  on  a  modern  city  of  such  a  brief  interruption  as  a 
great  blizzard. 

3.  Find  the  reasons  for  the  rise  and  growth  of  the  following:  London, 
York,  Paris,  St.  Omer,  Lille,  St.  Denis,  Lyons,  Bruges,  St.  Cloud.     [Use 
a  geography  and  the  encyclopedia.] 

4.  Starting  from  the  statements  in  the  text,  that  in  a  manor  of  100 
inhabitants  the  only  specialists  were  perhaps  miller  and  smith,  try  to 
think  of  specialists  who  would  appear  as  the  group  grew  in  size  to  1,000; 
to  10,000;  to  100,000;  1,000,000.     For  example,  when  would  the  follow- 
ing  appear:   watch-maker,    artificial   limb-maker,    shoe-maker,    saddler? 
[The  business  directory  of  a  city  may  supply  helpful  suggestions.] 

5.  How  has  the  growth  of  cities  in  the  U.  S.  affected  the  agriculture 
of  the  surrounding  districts  and  the  welfare  of  the  farmers? 

6.  Compare  the  size  of  medieval  towns  with  that  of  towns  and  vil- 


TOWN  TRADE  53 

lages  familiar  to  you,  and  try  to  realize  the  conditions  it  all  the  larger 
cities  were  swept  off  the  map.  [See  Abstract  of  the  Census  of  U.  S. 
giving  the  population  of  all  places  having  2,500  or  more  inhabitants, 
arranged  by  States.] 

7.  (a)  Make  a  list  of  the  ten  or  fifteen  largest  towns  in  modern  Eng- 
land.    [Statesman's  Year-Book,  index,  England,  cities  and  towns.]     (6) 
Compare  this  with  a  list  of  towns  in  early  times  and  discover  what  large 
towns  are  of  recent  origin.     [Cheyney,  English  towns,  pp.  35-39.     Be- 
ware of  the  large  figures  of  population,  p.  38;  they  are  misleading.] 

8.  Write  a  report  on  the  economic    and    social  life  of  a  medieval 
town.    [See  M.  D.  Harris,  Life,  or  the  original  local  customs  in  Cheyney, 
English  towns,  pp.  2-6.] 

9.  Write  a  similar  report  on  the  merchant  gilds.       [Harris,  Life, 
chap.  7;    Cheyney,  English  towns,  pp.  12-20.] 

10.  Reviewing  the  list  of  trades  in  the  text,  try  to  realize  how  the 
people  managed  in  the  manorial  period,  when  professional  specialists  in 
these  trades  were  lacking. 

11.  Study  the  list  of  craft  gilds  in  York,  1415;   find  from  dictionary 
and  encyclopaedia  the  meaning  of  each  trade  mentioned;    arrange  them 
in  classes,  as  for  example:    food,  clothing,  building  utensils,  personal 
service,  etc.     [Cheyney,  English  towns,  pp.  29-32.] 

12.  Write  a  report  on  the  town  artisans  and  the  craft  gilds.     [Harris, 
Life,  chap.     13;   Cheyney,  English  towns,  pp.  21-29.] 

13.  Compare  medieval  and  modern  ideas  on  the  regulation  of  trade. 
[Farrer,  The  State  in  its  relation  to  trade,  N.  Y.,  Macmillan,  1902,  $1.] 

BIBLIOGRAPHY 

Gross,  Sources,  §§24o,  72. 

GENERAL.  —  For  the  significance  of  towns  in  the  development  of  the 
industrial  organization  the  student  may  be  referred  to  two  important 
books,  differing  in  details:  Schmoller,  Merc,  system;  Bucher,  Indust. 
evolution.  Chapters  on  the  rise  of  towns  and  town  life  will  be  found  in 
Adams,  *Civ.;  Emerton,  Med.  Eur.;  Robinson,  Middle  Ages;  Munro, 
Hist.;  -etc.  Greater  emphasis  is,  of  course,  laid  on  the  economic  (includ- 
ing commercial)  aspects  of  town  life  in  **  Ashley  and  *  Cunningham. 
Jessopp,  *  Coming,  gives  a  vivid  picture  of  urban  and  rural  life  of  the 
period.  Mary  D.  Harris.  **  Life  in  an  old  English  town  (Coventry), 
London,  1898  (N.  Y.,  Macmillan,  $1.75),  should  be  very  useful  to  student 
and  teacher.  Green,  **  English  Towns,  is  valuable  and  interesting  for 
the  English  towns  of  the  fifteenth  century. 

SOURCES.  —  Cheyney,  **  English  towns  and  gilds,  Penn.  Transla- 
tions, Phila.,  1895,  $.20,  gives  an  excellent  selection,  which  can  be  used 
to  advantage  with  advanced  students. 


CHAPTER  VII 
LAND  TRADE 

59.  Roads  neglected,  or  left  to  benevolent  associations.  — 

The  maintenance  of  the  roads  was  still  left  to  local  authorities. 
We  find  in  the  court  records  of  manors  that  the  people  reported 
stretches  of  road  which  were  in  bad  condition,  and  ordered 
that  they  should  be  repaired  under  penalty  of  fine;  but  a 
road  had 'to  be  very  bad  before  it  attracted  attention,  and 
received  little  care  at  best.  The  clergy  were  the  leaders  in 
maintaining  the  roads,  for  their  estates  were  scattered  and 
they  felt  the  need  of  transportation  as  none  other  but  mer- 
chants did.  Pious  persons  also  devoted  themselves  to  this 
object,  as  a  meritorious  work  like  visiting  the  sick  or  caring 
for  the  poor;  they  formed  associations  to  keep  roads  in  repair, 
and  left  bequests  to  allow  the  work  to  be  carried  on  after  their 
death.  The  Alpine  hospices,  which  are  so  familiar  to  visitors 
in  Switzerland  now,  were  established  by  religious  orders  to 
help  travelers  and  merchants  on  their  way. 

60.  Difficulties  of  transportation  by  road.  —  A  feudal  lawyer 
distinguished   in  theory  five  kinds   of  roads:  the   path,   the 
wagon  road  of  eight  feet,  the  road  of  sixteen  feet,  the  highway 
of  thirty-two  feet,  and  the  Roman  roads  of  sixty-four  feet. 
There  was  nothing  in  reality  to  correspond  to  this  distinction. 
The  Roman  roads  were  still  in  use,  but  they  were  too  much 
worn  and  too  few  in  number  to  raise  the  general  level  of  trans- 
portation.    When  an  English  king  wanted  to  transport  pro- 
visions to  Scotland  about  1300,  he  required  four  horses,  or,  in 
the  northern  counties,  eight  oxen  to  a  wagon.     Transportation 
by  wagon  was  so  difficult   that    pack   animals  were  still  in 
general  use  and  travelers  nearly  always  went  on  horseback, 

54 


LAND  TRADE  55 

both  men  and  women  riding  astride,  and  twenty  miles  being 
considered  a  fair  day's  journey.  The  town  of  Bristol  was 
granted  a  county  court  in  1373  to  save  the  townspeople  the 
journey  to  Gloucester,  "distant  thirty  miles  of  road,  deep, 
especially  in  winter  time,  and  dangerous  to  passengers."  At 
the  very  end  of  this  period  (1499)  a  glover  traveling  to  market 
at  Aylesbury  was  drowned  with  his  horse  in  a  pit  which  a 
miller  had  dug  to  get  clay  from  the  road.  A  court  acquitted 
the  miller  on  the  ground  that  he  had  no  malicious  intent,  and 
really  did  not  know  of  any  other  place  where  he  could  get 
the  kind  of  clay  he  wanted. 

61.  Lack    of    bridges.  —  Bridges    \vere    still    rare.     Those 
which  the  Romans  had  built  fell  into  ruins;  they  were  rebuilt 
in  wood,  or  replaced  by  bridges  of  boats,  by  simple  ferries,  or 
by  mere  fords.     Complaint  was  made  to  the  English  Parliament 
in  1376  that  nobody  was  bound  to  maintain  the  bridge  over 
the  Trent  near  Nottingham;  the  bridge  was  "ruinous,"  and 
"oftentimes  have  several  persons  been  drowned,  as  well  horse- 
men, as  carts,  man  and  harness  " :  Parliament  refused  authority 
to  keep  the  bridge  in  repair.     A  large  number  of  towns  had 
grown  up  on  rivers,  as  is  shown,  for  instance,  by  the  number 
of  English  town  names  ending  in  -ford,  -bridge,  -ferry;  and 
the  difficulty  and  danger  of  crossing  the  streams  were  serious 
obstacles  to  trade.     Pious  and  public-spirited  people  took  up 
the  work  which  the  government  was  still  unable  to  undertake, 
and  devoted  their  time  and   money  to  the  construction  and 
repair  of  bridges;  the  church  assisted  by  the  grant  of  indul- 
gences (remitting  church  punishments  for  sins)  to  those  who 
contributed.     Even  now  the  religious  character  of  some  of  the 
European  bridges  is  attested  by  the  chapels  built  on  or  near 
them. 

62.  Advantages  of  river  transportation.  —  The  difficulties 
of  land  transport  led  to  the  use  of  river  navigation  wherever  it 
was  practicable.     It  is  said  that  the  flow  of  many  European 
rivers  was  more  full  in  the  Middle  Ages  than  it  is  now,  and 
though  the  course  was  apt  to  be  obstructed  by  mill  dams  and 


56  A  HISTORY  OF  COMMERCE 

fish-weirs,  and  little  was  done  to  preserve  the  channel,  mer- 
chants could  transport  by  rivers  bulky  articles  which  would 
not  have  paid  for  their  carriage  on  land.  A  single  boat,  it  is 
estimated,  carried  as  much  as  500  pack  animals  would  take, 
and  it  often  paid  to  go  far  out  of  the  shortest  way  to  a  market 
to  follow  navigable  water.  It  was  cheaper,  for  instance,  to 
bring  salt  from  Liineburg  to  Brandenburg  by  way  of  Liibeck 
and  Stettin,  though  the  direct  land  route  was  of  course  far 
shorter. 

63.  Danger  of  violence  on  the  road.  —  The  physical  diffi- 
culties of  travel  were  accompanied  by  danger  of  violence  of 
which  people  nowadays  have  little  conception.     The  church 
attempted  to  secure  the  safety  of  merchants,  and  cooperated 
with  the  political  authorities  in  maintaining  the  "Peace  of 
God,"   and   in  repressing  disorder.     The  feudal  system  had 
developed  into  a  more  efficient  system  of  government  in  its 
later  period,  and  something  like  the  modern  state  rose  from 
it  before  the  close  of  the  Middle  Ages.     But  in  spite  of  all 
efforts  highway  robbery  and  violence  were  regular  and  normal 
occurrences,  even  in  the  more  advanced  countries.     In  many 
parts  of  Europe  merchants  still  traveled  in  temporary  bands 
or  "caravans,"  for  better  protection,  and  students  going  to 
college  in  England  were  encouraged  to  carry  arms  on  the 
journey. 

64.  Complicity  of  feudal  lords  in  robbery.  —  The  King  of 
France  tried  in  vain,  in  the  thirteenth  century,  to  make  feudal 
lords   responsible  for  crimes   committed   in  their  territories. 
The  lords  were  often  accomplices  in  the  crimes;  the  King  him- 
self was  not  always  above  suspicion;  and  even  dignitaries  of 
the  church  or  heroes  of  the  crusades  turned  highway  robbers 
on  occasion.     An  indication  of  the  conditions  is  given  by  a 
complaint  of  the  English  House  of  Commons  in  1348.  "  Whereas 
it  is  notoriously  known  throughout  all  the  shires  of  England 
that  robbers,  thieves,  and  other  malefactors  on  foot  and  on 
horseback,  go  and  ride  on  the  highway  through  all  the  land  in 
divers    places,    committing   larcenies   and    robberies;    may   it 


LAND  TRADE  57 

please  our  lord  the  king  to  charge  the  nobility  of  the  land  that 
none  such  be  maintained  by  them,  privately  nor  openly;  but 
that  they  help  to  arrest  and  take  such  bad  fellows."  A  cen- 
tury before,  two  merchants  from  the  continent  had  been 
robbed  in  Hampshire;  the  culprits  were  arrested,  but  could 
not  be  convicted  for  a  long  time;  finally  more  than  sixty 
persons  were  executed  for  complicity  in  this  and  similar  crimes, 
the  number  including  many  men  of  position,  numerous  royal 
officials  and  some  even  of  the  king's  household.  Shakespeare's 
story  of  Prince  Hal's  exploits  on  the  road  may  not  be  true, 
but  it  is  not  at  all  improbable. 

65.  Tolls  imposed  by  feudal  authorities.  —  It  would  be  a 
great  mistake  to  suppose  that  the  merchant's  expense  com- 
prised only  the  sums  necessary  to  transport  his  goods  over 
bad  roads  and  to  protect  himself  against  robbers.     In  addition 
every  merchant  had  to  pay  the  feudal  tolls :  tolls  for  the  repair 
of  a  road  which  was  not  kept  up,  and  tolls  for  protection  which 
he  had  to  furnish  himself.     Feudal  lords  were  everywhere,  and 
every  feudal  lord  tried  to  make  money  out  of  the  movement 
of  men  and  goods.     As  early  as  the  time  of  Charlemagne  (809) 
we  find  the  central  government  attempting  to  keep  the  ways 
of  commerce  open.     Charlemagne  forbade  the  compelling  of 
travelers  to  use  bridges  when  there  were  short-cuts,  or  the 
building  of  bridges  in  dry  places  to  extort  passage    money 
from  travelers,  or  the  stretching  of  ropes  across  streams  to 
force  ships  to  pay  for  the  right  of  passage  with  money  or  wares. 
The  attempt  was  vain.     The  power  of  the  central  government 
fell  into  the  hands  of  local  lords,  and  was  exercised  by  them 
without  regard  to  any  but  selfish  and  local  interests. 

66.  Variety  and  number  of  tolls.  —  The  variety  of  feudal 
tolls  is  almost  inconceivable.     Attempts  by  scholars  to  classify 
them  as  we  should  modern  fees  and  taxes  are  useless,  because 
no  principle  underlay  the  system.     A  French  scholar  has  made 
a  list  of  seventeen  different  kinds  of  tolls,  but  this  is  rough 
and  incomplete.     We  can  say  in  general  that  tolls  were  levied 
everywhere  and  on  everything.     Even  a  jongleur^  the  equiva- 


58 


A  HISTORY  OF  COMMERCE 


lent  to  the  modern  organ-grinder,  could  not  pass  the  gates  of 
Paris  without  making  his  monkey  show  off  to  pay  his  own 
way.  A  man  had  to  pay  toll  not  only  when  he  went  over  a 
bridge;  he  had  to  pay  a  toll  when  he  went  under  it,  and  could 
not  escape  the  toll  by  going  around  it. 


HUDSON  RIVER  FROM   NEW  YORK  TO  TROY   Same  Scale  as  Loire  Riyer 


RIVER  LOIRE  FROM  ORLEANS  TO  THE  SEA 

-=— f ,      „>;  ,  ,  .I  i     Scale   of    Miles 


Places  at  which  tolls  were  levied  are  marked  by  a  line  across  the  river,  or,  when 
many  were  levied  at  one  place,  by  lines  drawn  near  the  river.  The  tolls  as  shown 
were  established  at  different  times  down  to  the  seventeenth  century,  and  af- 
fected different  wares ;  so  that  a  merchant  did  not  have  to  pay  all  of  them  at 
any  time.  The  map  of  the  Hudson  is  inserted  as  a  help  in  estimating  distances. 

In  the  thirteenth  century  there  were  on  one  side  of  the 
Rhone  four  toll-stations  on  a  stretch  of  little  over  thirty  miles. 
In  the  fourteenth  century  there  were  74  tolls  on  the  Loire, 
from  Roanne  to  Nantes;  12  on  the  Allier;  10  on  the  Sarth; 
60  on  the  Rhone  and  Saone;  70  on  the  Garonne  or  on  the 
land-routes  between  la  Reole  and  Narbonne;  9  on  the  Seine 
between  the  Grand  Pont  of  Paris  and  the  Roche-Guyon. 
There  were  13  toll-stations  on  the  Rhine  between  Mainz  and 
Cologne.  In  a  few  hours'  walk  around  Nuremberg  one  passed 
10  stations. 

The  traveler  abroad,  whose  route  follows  the  line  of  medieval 


LAND  TRADE  59 

trade,  is  struck  with  the  number  of  feudal  castles  which  he 
passes.  He  admires  the  picturesque  ruins,  perhaps,  without 
realizing  that  each  castle  was  once  a  toll  station  and  without 
reflecting  that  the  Hudson  shows  a  higher  stage  of  civilization 
than  the  Rhine. 

67.  Abuses  of  the  tolls.  —  The  burden  of  the  tolls  was 
aggravated  by  the  fact,  already  suggested,  that  the  merchant 
got  nothing  in  return  except  the  right  to  look  out  for  himself. 
The  merchants  were  forced  to  associate  to  do  what  the  river 
lords  neglected:  keep  up  the  tow-paths,  drag  the  river-bed, 
build  warehouses  and  wharves.  The  merchant  might  pay  a  lord 
for  a  safe-conduct  which  was  supposed  to  assure  him  protection 
in  a  certain  territory,  and  then  be  robbed  by  the  lord  himself. 

According  to  the  feudal  theory  exemption  from  tolls  must 
be  granted  in  certain  cases.  Supplies  for  the  army  and  navy, 
for  the  king  and  higher  officials,  for  churches,  hospitals,  and 
monasteries,  should  pay  no  toll.  Scholars  at  the  universities 
enjoyed  in  theory  an  immunity  which  they  could  not  secure  in 
fact.  The  merchant,  however,  was  always  regarded  as  fair 
prey,  and  wares  of  commerce  which  were  supposed  to  be 
exempt,  as  in  France,  for  instance,  wares  on  their  way  to 
Lyons  fair,  enjoyed  only  partial  immunity.  A  sixteenth-cen- 
tury French  writer  instances  as  an  example  of  the  oppression 
of  tolls  the  case  of  a  merchant  who  shipped  to  the  East  some 
cloth  that  was  wet  on  the  voyage  and  had  to  be  sent  back  to 
Paris  to  be  redyed;  all  along  the  road  in  France  the  tolls  had 
to  be  paid  over  again.  The  collectors  levied  toll  even  on  grain 
that  was  being  taken  to  mill,  on  cattle  that  were  to  be  used 
as  plow  animals,  on  agricultural  implements  and  manure. 

68.  Development  of  the  toll  system.  —  With  the  growth  of 
commerce  the  toll-stations  of  course  increased  in  value;  and 
the  practice,  grew  up  of  leasing  them  to  contractors,  who  paid 
a  high  sum  for  the  privilege  and  had  to  devise,  an  old  author 
tells  us,  "ten  thousand  new  and  unusual  tyrannies,  frauds  and 
exactions"  to  make  any  profit  for  themselves.  Many  kept 
taverns,  and  managed  to  detain  the  merchant  for  days  on 


60  A  HISTORY  OF  COMMERCE 

various  pretexts,  such  as  absence  of  the  proper  official.  Some 
made  the  merchant  pay  to  be  relieved  of  the  necessity  of 
having  his  wares  unpacked  and  weighed  and  measured  in 
detail.  Many  kept  the  tariff  secret,  and  extorted  what  they 
could  on  every  occasion.  Some  lived  far  from  the  highway, 
and  some  put  their  offices  by  design  on  impracticable  roads, 
and  fined  the  merchants  heavily  who  went  by  another  route. 

On  some  routes,  as  along  the  middle  Rhine,  Bingen  to 
Coblenz,  it  was  almost  impossible  for  commerce  to  be  carried 
on  except  along  the  river,  and  very  heavy  tolls  could  be  levied 
here  without  danger  of  the  merchants  escaping;  but  under 
other  conditions  the  collectors  established  wings,  as  they  were 
called,  secondary  offices  on  the  side-roads  to  prevent  evasion 
of  the  toll.  Some  collectors  established  regular  pools,  to  use 
the  modern  term  applied  to  railroad  combination;  twenty-five 
or  thirty  of  them,  representing  perhaps  five  or  six  separate 
toll-areas,  associated  and  agreed  upon  their  rates;  then  they 
pooled  and  divided  their  profits. 

69.  Constraint  of  trade  by  tolls.  —  The  establishment  of 
toll-stations  put  an  artificial  constraint  on  trade,  which  kept  it 
in  the  paths  most  convenient  for  the  collectors,  not  most 
suitable  to  the  merchants.  Lords  would  not  allow  new  and 
better  roads  to  be  built,  for  fear  that  profits  on  the  old  roads 
would  be  impaired.  The  compulsion  to  follow  certain  routes 
(German  S trass enzwang)  became  a  serious  evil  as  commerce 
developed  and  sought  new  openings;  and  the  loss  to  the  public 
was  far  greater  than  any  gain  by  the  toll  receiver. 

Peculiarly  noxious  customs  clustered  around  the  rights 
which  feudal  lords  claimed  for  themselves  in  the  period  when 
the  central  government  was  powerless.  The  right  to  a  wrecked 
ship,  which  had  once  been  the  prerogative  of  the  king,  could  be 
distorted  so  that  the  whole  cargo  of  a  Regensburg  ship  was 
confiscated  in  1396  because  a  single  little  cask  had  fallen  off 
into  the  Danube.  It  was  an  accepted  rule  in  Germany  that  if 
a  wagon  broke  down  so  that  the  axle  touched  the  ground  it 
became  a  part  of  the  land  and  belonged  to  the  lord  of  the 


LAND  TRADE  61 

territory;  break-downs  must  have  been  frequent,  in  view  of  the 
wretched  condition  of  the  roads,  and  it  has  been  suggested  that 
lords  sought  to  cause  them  by  traps  and  pitfalls. 

70.  Burden  of  the  tolls  on  trade.  —  The  most  evident  effect 
of  the  tolls  was  the  additional  cost  of  transportation  which 
must  be  paid,  of  course,  by  the  consumer.  The  price  of  a 
ware  might  rise,  within  a  comparatively  short  distance,  so 
much  that  it  could  not  be  sold  at  all.  It  has  been  estimated 
that  in  the  fourteenth  century  the  Rhine  tolls  merely  on  the 
stretch  between  Bingen  and  Coblenz  amounted  to  two  thirds  of 
the  value  of  the  wares.  Even  in  the  fifteenth  century,  and 
after  some  reform  had  been  effected  in  the  French  tolls,  the 
price  of  goods  was  doubled  by  carriage  from  Nantes  to  Orleans 
on  the  Loire  or  from  Honfleur  to  Paris  on  the  Seine. 

Besides  the  loss  of  money  there  was  the  loss  of  time;  a 
merchant  might  arrive  at  his  destination  too  late  to  find  a 
market  for  his  wares,  or  might  find  that  they  had  deteriorated 
on  the  road.  The  monks  of  Beauvais  took  three  pennyworths 
from  each  horse  load  that  passed  by,  and  on  fast  days  they 
spent  so  much  time  in  selecting  their  fish  that  the  rest  of  the 
load  spoiled  before  it  reached  Paris. 

QUESTIONS  AND  TOPICS 

1.  Make  a  study  of  the  roads  in  your  own  State,  noting  (a)  the  extent 
of  good  and  of  bad  roads,  (6)  the  effect  on  transportation,  (c)  the  system 
under  which  the  roads  are  maintained,    (d)  organized  attempts  at   im- 
provement.   Study  the  system  of  New  Jersey  and  its  effects.    [Document? 
aiding  in  this  study  may  be  obtained  from  the  Department  of  Agriculture,. 
Washington,  and  probably  from  the  government    of  your   own  State  — 
apply  to  State  Librarian  for  information.] 

2.  To  what  extent  is  river  navigation  practised  in  your  State?     Was 
it  not  more  important  before  the  introduction  of  railways? 

3.  Estimate  the  distance  between  the  points  named  in  the  text, 
sect.  62,  by  land  and  by  water. 

4.  Have  we  had  in  the  U.  S.  in  recent  times  any  similar  dangers  of 
violence  in  transportation?    [Read  the  history  of  gold-mining  in  Califor- 
nia, in  H.  H.  Bancroft  or  other  available  books.] 

5.  Robber   knights   in    medieval   Germany.     [Baring-Gould,    Story, 
chap.  22.] 


62  A  HISTORY  OF  COMMERCE 

6.  Read  the  first  part  of  Shakespeare,  Henry  IV,  about  the  exploits 
of  Prince  Hal  and  Falstaff  on  the  highway. 

7.  What  would  be  the  effect  on  trade  in  your  State   if  tolls  were 
levied  on  the  border  of  every  county,  or  even  inside  the  counties? 

8.  Using  a  good  map  find  from  the  scale  of  miles  the  length  of  one  of 
the  stretches   mentioned  in   sect.  66    (for  example,  Mainz  to  Cologne), 
and  insert  the  toll  stations;  then  transfer  this,  changing  the  scale  if  neces- 
sary, to  some  road  or  railroad  entering  the  place  where  you  live. 

9.  Modern  railroad  officials  are  sometimes  called  "robber  barons." 
Assuming  the  truth  of  charges  made  against  them,  discuss  the  appropriate- 
ness of  the  term,  indicating  points  of  likeness  and  of  difference  with  re- 
spect to  medieval  nobles. 

10.  Compare  medieval  and  modem  compulsion  in  the  choice  of  routes. 
What  is  alleged  to  be  the  attitude  of  transcontinental  railroads  to  the 
construction  of  the  Panama  Canal? 

11.  Using  the  method  suggested  in  sect.    66  apply   the   statements 
in  sect.  70  to  conditions  at  home,  and  show  how   much   medieval  tolls 
would  add  to  the  present  low  charges  of  transportation. 

BIBLIOGRAPHY 

By  far  the  best  reference  that  can  be  given  is  Jusserand,  **  English 
•wayfaring  life.  If  a  library  containing  older  books  is  available  much  of 
interest  will  be  found  in  Smiles,  *  Lives  of  the  engineers,  London,  1862, 
vol.  1.  A  good  study  will  be  found  also  in  the  Economic  Review,  vol.  7, 
July,  1897:  Alice  Law,  English  towns  and  roads  in  the  thirteenth  century. 


CHAPTER  VIII 
FAIRS 

71.  Fairs ;  the  reason  for  their  existence.  —  The  foregoing 
description  of  medieval  commerce  will  have  shown  that  trade 
was  far  less  extensive  than  it  is  now,  and  will  suggest  the 
reason  for  one  of  the  characteristic  trading  institutions  of  the 
time  —  the  fairs. 

Every  person  with  wares  to  sell  seeks  a  purchaser  who 
desires  those  particular  wares  and  who  will  give  him  in  ex- 
change something  that  he  himself  desires.  Nowadays,  for 
instance,  a  farmer  brings  his  country  products  to  the  city, 
seeks  out  a  produce  merchant  who  will  give  him  money  for  it, 
makes  his  purchases  at  the  dry  goods  store  with  the  money, 
and  returns  contented;  he  has  exchanged  his  surplus  for  what 
he  lacks.  If  there  is  no  special  store  where  he  can  sell  his 
produce  he  must  seek  out  buyers  by  going  around  to  the 
separate  houses,  and  if  there  is  no  general  store  where  he  can 
make  his  purchases  he  must  again  hunt  up  the  individuals 
who  make  or  sell  what  he  desires.  Where  exchange  is  still 
relatively  rare  it  may  be  a  very  troublesome  process  to  find 
the  buyers  and  sellers  of  particular  wares,  and  the  following 
device  has  almost  always  been  adopted  to  meet  the  difficulty; 
people  who  desire  to  trade  agree  to  meet  at  a  certain  time  and 
place,  so  that  there  will  be  every  chance  that  buyer  and  seller 
will  find  each  oth?r  and  secure  that  coincidence  of  supply  and 
demand  which  exchange  implies.  The  current  of  trade  is 
dammed  for  a  time  as  it  were;  then  allowed  to  flow  in  much 
greater  volume  for  a  little  while,  then  dammed  again. 

72.  Comparison   of  fairs  with  markets   and   modern   ex- 
changes. —  Even    now    the    old    custom   of    "  market    days' ' 

63 


64  A  HISTORY  OF  COMMERCE 

persists  in  some  places,  and  once  it  was  universal;  townspeople 
and  country  people  agreed  on  a  certain  day,  and  met  in  the 
market-place  then  to  exchange  their  wares.  A  fair  is  the 
same  kind  of  institution  as  a  market,  and  grew  up  for  similar 
reasons,  but  it  represented  a  further  step  of  development,  for 
it  attracted  buyers  and  sellers  from  a  far  greater  area,  and 
served  the  needs  of  wholesale  as  well  as  retail  trade.  The 
fair  is,  of  course,  much  less  advanced  than  the  modern  ex- 
changes (stock  and  produce),  from  the  fact  that  it  was  inter- 
mittent instead  of  being  continuous,  as  well  as  for  other  reasons; 
but  in  the  Middle  Ages  it  was  the  means  by  which  commerce 
grew  strong,  and  the  prosperity  of  commerce  could  be  measured 
by  the  prosperity  of  fairs. 

The  fairs  always  attracted  people  for  social  as  well  as 
business  purposes;  life  in  the  Middle  Ages  would  be  regarded 
as  insufferably  dull  at  the  present  time,  and  both  townspeople 
and  country  people  enjoyed  the  excitement  which  the  fair 
brought  with  it.  There  were  "side-shows"  in  plenty,  then; 
wild  animals,  trained  dogs,  and  monstrosities,  poets  and  musi- 
cians, actors  and  clowns,  dancing  and  gambling  halls;  and 
there  was  a  good  opportunity  to  turn  a  penny  dishonestly  as 
well  as  honestly.  The  court  roll  of  the  English  fairs  of  St.  Ives 
tells  us  of  a  defendant  who  was  caught  selling  a  ring  of  brass 
for  5Jd.,  saying  "that  the  ring  was  of  the  purest  gold,  and 
that  he  and  a  one-eyed  man  found  it  on  the  last  Sunday  in 
the  Church  of  St.  Ives,  near  the  Cross." 

73.  Privileges  of  merchants  trading  at  a  fair.  —  The  fair 
ordinarily  grew  up  under  the  protection  of  some  feudal  lord, 
secular  or  ecclesiastical,  who  endeavored  in  every  way  to 
further  its  growth  that  he  might  increase  his  revenue  from 
the  taxes  he  imposed  on  it.  The  lord  of  a  fair  endeavored  to 
attract  merchants  by  guaranteeing  them  protection  on  their 
way,  and  there  were  many  cases  in  which  the  lord  took  up  the 
cause  of  merchants  of  his  fair  who  had  been  robbed  or  mal- 
treated by  others,  and  forced  restitution.  Furthermore,  he 
endeavored  to  secure  exemption  from  tolls  for  wares  on  the 


FAIRS  65 

way  to  his  fair,  and  sometimes  merchants  on  their  way  to  a 
fair  were  freed  from  the  attachment  of  the  person  for  debt. 
Inside  the  fair  a  freedom  of  trade  was  allowed  which  was 
unusual  at  the  time,  and  various  special  privileges  were  granted 
the  merchants.  The  most  important  of  these  was  a  special 
court  in  which  cases  of  breach  of  contract  and  the  like  could 
be  tried.  It  was  called  the  Court  of  Pie  Powder  (Pie,  French 
pied,  foot;  curia  pedis  pulverizati,  court  of  dusty  foot)  from 
the  dusty  feet  of  the  merchants,  or,  as  some  said,  because 
justice  was  done  as  speedily  as  dust  would  fall  from  the  foot. 
At  any  rate  this  court  did  give  a  rough  and  ready  means  of 
settling  commercial  disputes  by  referring  them  to  a  committee 
of  traders,  which  was  highly  prized  because  commercial  law 
was  still  in  its  infancy,  and  no  justice  could  be  looked  for  in  a 
manorial  or  a  feudal  court. 

74.  Great  fairs  in  Europe.  The  fairs  of  Champagne.  —  It 
Avould  be  possible  to  give  a  long  list  of  fairs,  for  every  country 
of  Europe  had  them  in  varying  number  at  different  times. 
The  oldest  was  probably  that  of  St.  Denis  at  Paris,  which 
may  have  been  founded  (as  its  patrons  alleged)  in  the  seventh 
century,  and  which  was  certainly  in  active  operation  long 
before  the  time  of  Charlemagne.  In  a  later  period  another 
Paris  fair,  that  of  St.  Germain,  became  more  important,  and 
later  still  the  fairs  in  the  French  province  of  Champagne 
became  the  most  flourishing  in  Europe.  The  prosperity  of 
these  fairs  was  due  in  part  to  their  geographical  position, 
which  made  them  a  natural  trade  center  and  distributing 
point  when  commerce  on  land  was  more  important  than  that 
on  sea,  but  still  more,  apparently,  to  the  good  government 
and  wise  policy  of  the  Counts  of  Champagne.  The  Counts 
gave  sufficient  protection  both  at  home  and  abroad,  main- 
tained regular  and  reasonable  dues,  and  did  everything  to 
stimulate  the  confidence  of  the  merchant  class.  They  got  an 
enviable  reputation  by  their  strictness  in  forcing  the  proper 
execution  of  contracts  made  at  the  fairs,  and  took  such  pre- 
cautions to  assure  the  payment  of  debts  contracted  there  that 
5 


THE  PAIRS  OF  CHAMPAGNE 

/    Places  In  which  the  Fairs  were  held 
jKoutes  to  and  from  the  Fairs 


Most  of  the  traffic  of  the  Champagne  fairs  went  North  and  South,  by  way  of  Flanders 
and  of  Italy.  Merchants  from  Normandy  ascended  the  river  Oise  to  its  junction 
with  the  land  route.  The  route  of  German  merchants  is  unknown,  but  most  of  them 
probably  went  by  way  of  Bruges. 


FAIRS  67 

some  merchants  (or  bankers)  went  to  the  fairs  simply  to  loan 
money. 

76.  Trade  at  the  Champagne  fairs ;  other  continental  fairs.  — 
In  the  thirteenth  century,  the  period  of  their  greatest  pros- 
perity, six  fairs  were  held  at  different  places  in  Champagne, 
of  which  Troyes  and  Provins,  southeast  of  Paris,  were  the 
most  important.  Each  lasted  over  six  weeks,  and,  following 
in  rotation,  they  supplied  an  almost  continuous  market.  Here 
one  might  find  all  the  wares  which  formed  the  objects  of  com- 
merce in  Europe;  textiles  of  silk,  wool,  and  linen;  minor  manu- 
factures and  jewelry;  drugs  and  spices;  raw  materials  like  salt 
and  metals;  leather,  skins,  and  furs;  foods  and  drinks,  live 
stock  and  slaves.  The  bulk  of  the  trading  was  done  by  mer- 
chants from  various  parts  of  France  and  Flanders  (modern 
Belgium)  and  by  Italians  who  came  up  over  the  Alpine 
passes;  there  were  also  Germans  and  Spanish,  and,  in  less 
number,  English,  Dutch,  and  Swiss.  Wares  came  from  more 
distant  countries,  Scandinavia  and  the  eastern  Mediterranean, 
but  changed  hands  on  the  way. 

The  fairs  declined  as  heavier  dues  were  imposed,  and 
especially  when  Champagne  was  brought  directly  under  the 
French  king,  about  1300;  wars  diverted  the  merchants  from 
Champagne  to  Flanders,  and  the  growth  of  sea-trade  favored 
this  same  movement.  The  Champagne  fairs  dwindled  to  insig- 
nificance, and  their  place  was  taken  by  the  fairs  of  Bruges  and 
Cologne,  of  Frankfurt  on  the  Main,  Geneva,  and  Lyons. 

76.  English  fairs.  —  England  was  near  the  circumference 
of  trade  in  this  period,  instead  of  being  at  the  center  as  it  now 
is,  and  its  commerce  was  not  so  highly  developed  as  that  of 
some  of  the  Continental  countries.  The  English  fairs,  there- 
fore, were  of  less  importance,  and  in  most  cases  did  not  attract 
merchants  from  distant  countries.  The  largest  English  fair 
"was  Stourbridge  Fair  held  about  a  mile  from  Cambridge,  in 
an  excellent  position  for  trade  with  the  low  countries  across 
the  Channel,  and  for  the  distribution  of  goods  through  the 
thickly  populated  districts  of  England.  Another  great  English 


68  A  HISTORY  OF  COMMERCE 

fair  was  that  of  Winchester,  held  each  year  for  sixteen  days% 
beginning  on  August  31st.  "The  hill-top  was  quickly  covered 
with  streets  of  wooden  shops;  in  one  the  merchants  from 
Flanders,  in  another  those  of  Caen  or  some  other  Norman 
town,  in  another  the  merchants  from  Bristol.  Here  were 
placed  the  goldsmiths  in  a  row,  and  there  the  drapers;  while 
around  the  whole  was  a  wooden  palisade  with  guarded  entrance, 
—  precautions  which  did  not  always  prevent  enterprising 
adventurers  from  escaping  payment  of  toll  by  digging  a  way 
in  for  themselves  under  the  wall.  .  .  .  All  trade  was  com- 
pulsorily  suspended  at  Winchester,  and  within  a  'seven-league 
circuit/  guards  being  stationed  at  outlying  posts,  on  bridges 
and  other  places  of  passage,  to  see  that  the  monopoly  was 
not  infringed.  At  Southhampton,  outside  the  circuit,  nothing 
was  to  be  sold  during  the  fair-time  but  victuals,  and  even  the 
very  craftsmen  of  Winchester  were  bound  to  transfer  them- 
selves to  the  hill  and  there  carry  on  their  occupation  during 
the  fair.  There  was  a  graduated  scale  of  tolls  and  duties;  all 
merchants  of  London,  Winchester,  or  Wallingford  who  entered 
during  the  first  wreek  were  free  from  entrance  tolls;  after  that 
date  newcomers  paid  tolls,  except  the  members  of  the  merchant 
gild  of  Winchester." 

QUESTIONS  AND  TOPICS 

1.  Following  the  reasons  given  in  sect.  71  to  explain  the  rise  of  fairs, 
show  why  they  have  declined  in  recent  times.    What  effect  will  the  exten- 
sion of  railroads  and  the  development  of  trade  between  Asia  and  Europe 
have  upon  the  fairs  of  Nijni  Novgorod? 

2.  Set  down  all  the  points  of  likeness  and  of  difference,  so  far  as  they 
occur  to  you,  of:  market,  fair,  produce  or  stock  exchange. 

3.  Study  the  history  of  fairs  in  your  own  State.     Did  the  "county 
fair"  once  have  more  economic  importance  than  it  has  now? 

4.  Does   a   modern   stock-exchange   seek   to   attract   customers   by 
offering  guarantees  of  special  security,  as  in  the  case  of  fairs?    [Study 
the  rules  of  the  exchange,  and  the  pains  taken  to  secure  honesty  and 
solvency  of  members.] 

5.  Study,  on  a  good  map,  the  advantages  of  location  (transportation 
by  land  and  water,  nearness  to  advanced  commercial  people)  of  the  Cham- 
pagne towns;  of  their  successors  in  commercial  importance. 


FAIRS  69 

6.  Indicate   on  a  sketch  map  of  England  the  position  of  medieval 
fairs.     [See  the  index  of  Cunningham  or  Ashley  ] 

7.  Write  a  report  on  English  fairs  in  the  Middle  Ages  [same  reference.] 

8.  Write  a  report  on  one  of  the  following  topics : 

(a)  The  great  fairs  of  Europe.  [Home,  Harper's  Magazine,  vol.  46, 
p.  376.] 

(6)  The  fair  of  Nijni  Novgorod.  [T.  Child,  Harper's  Magazine,  vol.  79, 
p.  670.] 

(c)  Kentucky  fairs.  [James  Lane  Allen,  Harper's  Magazine,  vol.  79, 
p.  553.] 

BIBLIOGRAPHY 

Gross,  Sources,  has  no  separate  section  on  fairs,  but  includes  a  num- 
ber of  books  on  them,  to  be  found  by  consulting  the  index.  A  bibli- 
ography will  be  found  also  in  the  article  **  Fairs,  by  John  Macdonald,  in 
the  Encyc.  Brit.;  this  article  can  be  heartily  recommended  to  teacher  and 
student.  For  modern  fairs  see  Poole's  Index  of  Periodical  Lit.  Bourne, 
Romance  of  trade,  devotes  chap.  3  to  fairs. 


CHAPTER  IX 
SEA  TRADE 

77.  Rise    of    sea    commerce.    The    Scandinavians.  —  We 

might  suppose,  in  view  of  the  difficulties  and  dangers  of  travel 
on  land,  that  the  trade  of  Europe  would  have  been  forced  to- 
the  sea  during  the  feudal  period.  In  the  last  two  centuries  of 
the  Middle  Ages  there  was,  in  fact,  a  growth  of  maritime- 
commerce  which  prepared  the  way  for  the  great  discoveries 
and  the  oceanic  period  of  modern  commerce.  Before  this 
period,  however,  the  means  of  navigation  were  still  so  slight 
that  regular  and  extended  commerce  on  the  sea  was  the  excep- 
tion  rather  than  the  rule. 

In  Northern  Europe  the  Scandinavians  were  the  leaders  in 
the  development  of  navigation.  We  get  an  idea  of  the  ships 
that  they  used  from  one  which  was  discovered  a  few  years 
ago  in  a  burial  mound  in  southern  Norway,  where  it  had  been 
preserved  since  the  ninth  century,  it  is  supposed.  It  is  an 
open  boat,  clinker  built,  and  fashioned  to  go  in  either  direc- 
tion; it  is  about  75  feet  long,  and  has  places  for  15  oars  on 
each  side,  but  no  arrangement  for  a  sail.  Similar  boats,  with 
the  addition  of  a  rudder  and  hutch  at  each  end,  are  still  used 
in  the  Lofoten  Isands.  They  are  well  suited  to  carry  pas- 
sengers along  the  coast,  but  have  small  cargo  capacity,  and,  of 
course,  are  unfit  for  long  sea  voyages.  The  Scandinavian 
Vikings,  indeed,  used  them  mainly  for  raiding  and  piracy,  and 
in  them  harried  for  centuries  the  coasts  of  western  Europe, 
with  a  recklessness  which  accorded  with  their  warlike  char- 
acter. A  chronicle  speaks  of  Danes  who  were  tossed  about 
for  nearly  a  month  before  they  made  their  landing  in  England. 
Along  with  these  war  vessels  the  Scandinavians  must  have  had. 

70 


SEA   TRADE  71 

some  cargo-ships,  the  details  of  which  are  unknown  to  us;  a 
modern  writer  conceives  them  to  have  been  clumsy  and  slow, 
"tub-shaped,  round-bowed,  and  flat-bottomed."  Sailing  ships 
were  certainly  used  from  a  very  early  period. 

78.  Development  of  shipping  in  Northern  Europe.  —  The 
Bayeux  tapestry,  which  pictures  the  events  of  the  conquest 
of  England  by  the  Normans  in  1066,  shows  what  was  sub- 
stantially the  Viking  type  of  vessel  to  have  been  used,  in  that 
expedition;  the  boats  were  undecked,  and  several  foundered  at 
anchor  before  starting.     A   modern  writer  thinks   that   few 
were  over  30  tons  in  size,  and  that  none  carried  over  40  or  50 
men.     About  two  centuries  later  the  seals  of  Sandwich  and 
Dover  show  a  ship  still  undecked,  but  provided  with  a  rudder 
working  over  the  side,  fighting  platforms  at  bow  and  stern, 
and  a  mast  with  a  crow's-nest  at  the  top.     It  is  doubtful  how 
far  we  can  trust  representations  such  as  these  on  the  tapestry 
and  seal,  which  were  often  executed  by  persons  unfamiliar 
with  the  object  and  were  sure  to  be  conventional.     We  can, 
if  we  choose,  follow  the  statements  in  the  chronicles,  which 
would  make  the  ships  much  larger,  holding  a  hundred  men  or 
even  several  hundred;  the  chronicles  are  notorious,  however, 
for  the  constant  exaggeration  in  matters  of  statistics,  and  the 
truth  lies  probably  somewhere  in  between  our  two  sources  of 
information.     Down  to  the  fifteenth  century  the  single  mast 
with  the  square  sail  was  the  usual  rig.     Some  vessels,  however, 
carried  two  masts,  one  near  the  center  and  one  toward  the 
bow,  and  could  spread  six  sails.     For  shorter  trips  and  for  the 
coasting  trade  smaller  boats  were  used,  sometimes  propelled 
only  by  oars. 

79.  Development  of  shipping  in  the  Mediterranean.  —  Navi- 
gation developed  more  rapidly  in  the  Mediterranean,  especially 
after  the  beginning  of  the  Crusades,  than  in  northern  Europe. 
It  is  hard  to  believe  the  statements  according  to  which  the 
Mediterranean  ships  carried  1,000  or  even  1,500  pilgrims,  after 
all  allowance  is  made  for  the  crowding  which  would  be  per- 
mitted at  this  time,  but  the  Mediterraenan  ships  undoubtedly 


72  A  HISTORY  OF  COMMERCE 

surpassed  others  in  size  and  equipment.  Venice  presented  to 
France  in  1268  some  ships  which  measured  110  by  40  feet, 
which  were  11£  feet  deep  in  the  hold  and  had  a  height  between 
decks  of  6£  feet.  These  ships  carried  a  complement  of  over 
100  men,  and  must  have  measured  400  or  500  tons,  while 
English  ships  of  the  period  rarely  exceeded  50  or  100.  Medi- 
terranean shipping  regulations  of  about  this  date  show  ad- 
vanced ideas  concerning  the  construction,  the  equipment,  and 
the  loading  of  ships;  all  ships  were  inspected  and  none  could 
sail  which  did  not  comply  with  the  regulations. 

The  ship-builders  of  the  Mediterranean  ports  retained  the 
type  of  the  classical  galley,  depending  mainly  upon  oars  for 
its  propulsion.  The  hull  was  much  longer  than  in  the  northern 
type  of  sailing  ships  and  did  not  rise  far  above  the  water; 
both  characteristics  depended  on  the  need  of  placing  the 
oarsmen  where  they  could  work  to  advantage.  The  three 
square  sails  were  a  comparatively  late  improvement  on  the 
earlier  rig,  which  consisted  ordinarily  of  one  sail;  a  fair  wind 
was  utilized  for  helping  the  boat  on  its  course,  but  the  chief 
reliance  was  placed  on  the  oars. 

80.  Backwardness  of  the  art  of  navigation.  —  The  control 
of  a  ship  is  as  important  as  its  construction,  if  it  is  to  serve 
commerce,  and  the  growth  of  maritime  commerce  in  the  last 
centuries  of  the  Middle  Ages  was  due  as  much  to  improvements 
in  the  art  of  navigation  as  to  superior  ship  building.  During 
the  early  Middle  Ages,  as  in  ancient  times,  ship  captains  took 
their  lives  in  their  hands  when  they  ventured  out  of  sight  of  a 
familiar  coast.  The  only  means  they  had  for  determining  their 
position  at  sea  was  "dead-reckoning,"  i.e.,  estimating  the 
distance  that  they  had  traveled  from  a  known  point,  and  the 
course  that  they  had  steered;  and  to  know  their  course  they 
had  to  rely  upon  the  stars,  which  of  course  were  obscured  in 
stormy  weather,  when  their  help  was  most  wanted.  It  was 
customary,  on  voyages  in  the  open  sea,  to  sail  due  north  or 
south  to  the  parallel  of  the  destination,  then  to  turn  at  right 
angles  and  sail  due  east  or  west;  errors  in  the  course  of  8  or 


SEA    TRADE  73 

even  10  degrees  were  not  uncommon.  The  means  of  fixing 
the  course  in  any  weather,  the  mariner's  compass,  which  was 
discovered  by  the  Chinese,  and  is  supposed  to  have  been 
known  to  the  Arabs  at  this  time,  was  still  unknown  in  Europe. 

81.  Introduction  of  the  compass,  and  of  navigators'  direc- 
tories. —  The  first  documentary  evidence  of  acquaintance  with 
the  compass  in  the  West  dates  from  a  little  before  1200;  and 
within  fifty  years  we  find   it   mentioned  in  nearly  a  dozen 
different  places,  both  in  the  North  and  South  of  Europe.     It 
has  been  suggested  that  Mediterranean  sailors  may  have  been 
the  first  to  learn  of  the  compass,  from  the  Arabs,  but  that  they 
could  not  use  it  in  its  early  form  of  a  magnetized  needle  floated 
on  water  by  a  rush  or  cork,  because  of  the  choppy  seas;  later 
the  needle  was  balanced,  as  at  present,  on  a  point.     In  1300 
the  compass  was  in  general  use.     It  is  possible  to  exaggerate 
its  importance  as  a  cause  of  the  great  maritime  explorations; 
for  without  it  the  Northmen  had  made  their  distant  expeditions 
to  the  North  and  West,  and  with  it  the  Portugese  crept  along 
the  west  coast  of  Africa  only  slowly  and  timidly  for  a  con- 
siderable period.     As  a  means  to  regular  navigation,  however, 
it  was  indispensable;  and  the  great  extension  of  commercial 
voyages  in  the  last  two  centuries  of  the  Middle  Ages  is  incon- 
ceivable without  it.     Medieval  types  of  "sailing  directions" 
now  came  into  use;  these  were  manuals  telling  the  sailor  about 
the  coast,  the  tides,  the  bottom,  and  other  features  of  the 
route  he  was  to  traverse.     One  of  them,  written   probably 
before  1400,  covered  the  whole  West  of  Europe  from  Spain  to 
the  mouth  of  the  Finnish  gulf,  enabling  the  mariner  who  was 
provided  with  a  compass  (used  for  determining  the  time  of 
tides)  to  navigate  the  coast  with  a  fair  degree  of  safety. 

82.  Limits  of  early  trading  voyages.  —  Maritime  voyages 
were  made  to  suit  the  conditions  of  the  time.     In  the  first 
part  of  the  period  under  discussion  (say  before  1300),  they 
were  attempted  only  for  short  distances  and  in  the  part  of  the 
year  when  severe  storms  were  rare.     "  To  sail  after  Martinmas 
(November  11)  is  to  tempt  God,"  writes  an  old  chronicler; 


74  A  HISTORY  OF  COMMERCE 

and  in  the  early  days  of  the  Hanseatic  League  there  was  a 
regulation  by  which  ships  were  not  to  sail  after  November  11, 
and  were  to  be  in  port  if  possible  before  that  time.  Some 
time  afterwards  an  amendment  was  adopted  which  allowed 
ships  laden  with  beer,  herrings,  or  dried  cod  to  sail  as  late 
as  December  6,  because  the  cargo  was  perishable  or  was  needed 
for  the  Lenten  market.  The  extent  of  the  voyage  was  at  first 
short.  The  sailors  of  Bordeaux  would  go  as  far  as  the  coast 
of  Brittany  and  Normandy;  the  Normans  would  go  as  far  as 
England  and  Flanders;  and  so  the  chain  of  voyages  was  kept  up. 

83.  Medieval   seaports ;    contrast  with    modern.  —  Vessels 
were  so  small  that  they  needed  no  great  depth  of  water  in  their 
harbors,  and  could  ascend  rivers  for  a  considerable  distance. 
So  the  English  town  of  Bawtry,  lying  on  the  little  river  Idle, 
which  flows  into  the  Trent,  which  flows  into  the  Humber, 
which  flows  into  the  North  Sea,  was  called  in  an  official  docu- 
ment "the  port  of  Bawtry";  and  the  town  of  York,  situated 
on  the  river  Ouse,  another  branch  of  the  Humber,  claimed 
the  right  to  share  in  wrecks  at  sea,  as  though  it  were  on  the 
seaboard.     Ports  of  this  kind  were  actually  preferred  to  those 
on  the  coast  which  form  the  great  harbors  of  modern  times, 
for  they  gave  access  to  the  interior  markets  without  the  expense 
of  land  transportation,  and  they  offered  better  security  not 
onl}r  against  tempests  but  also  against  pirates.     Towns  like 
Rouen  on  the  Seine,  Nantes  on  the  Loire,  Bordeaux  on  the 
Garonne,  Narbonne  and  Aigues  Mortes  ("Dead  waters"),  on 
lagoons  of  the  Mediterranean  coast,  were  the  great  French 
ports  of  the  early  period. 

84.  Decline  of  medieval  seaports  in  later  times.  —  Occa- 
sionally a   medieval   port   would   keep  its   importance  later; 
from  the  list  above  we  can  select  Bordeaux,  and  there  are  a 
number  of  other  examples  in  Europe  —  London,  Antwerp,  and 
Hamburg,  for  instance.     Often,  however,  the  port  was  super- 
seded by  another  on  the  same  river  but  nearer  the  sea ;  the 
trade  of  Rouen  went  to  Havre;  the  trade  of  the  Humber  river 
system  has  gone  to  Hull;  the  commerce  of  Bremen  has  gone 


SEA   TRADE  75 

to  Bremerhafen.  The  town  of  Bruges,  in  Flanders  (modern 
Belgium),  once  the  most  important  port  in  Europe,  is  situated 
at  a  distance  of  seven  miles  from  the  sea,  and  this  might  be 
seven  hundred  as  far  as  its  present  oceanic  commerce  is  con- 
cerned. Its  trade  has  been  taken  by  seaports  giving  easy 
access  to  large  vessels;  in  the  same  way  the  trade  of  Narbonne 
and  Aigues  Mortes  has  passed  to  Marseilles. 

85.  Development    of   maritime    commerce;   persistence   of 
medieval  ideas.  —  After  about  1300  the  distances  covered  by 
sea   voyages   grew   much   greater.     Galleys   were  sailed   and 
rowed  from  Venice   all   the  way  to  Bruges,  and    met   there 
vessels  from  the  far  North  and  East  of  Europe;  English  sailors 
traded  regularly  with  southern  France,  Spain,  and  the  Scan- 
dinavian countries.     The  expense  of  transportation  by  sea, 
however,  was  still  great.     The  price  of  spices  was  in  Bruges 
two  or  three  fold  what  it  was  in  Venice;  and  English  wool 
transported  to  Florence  sold  there  for  two  to  twelve  times  as 
much  as  it  brought  at  home.     It  is  hard  for  us,  in  modern 
times,  to  realize  such  facts,  but  the  student  should  note  them 
carefully,  for  they  go  far  toward  explaining  the  slight  develop- 
ment of  commerce  even  in  the  latter  part  of  the  Middle  Ages. 

The  high  cost  of  transportation  is  itself  a  fact  demanding 
explanation.  Inefficient  ship-building  and  navigation  would 
account  for  it  in  large  part,  but  other  factors  are  still  to  be 
considered.  These  distant  voyages  were  carried  on  in  .the 
face  not  only  of  real  dangers  serious  enough,  but  also  of  far 
greater  dangers  imagined  by  ignorant  and  credulous  men. 
An  English  chronicler  says  that  in  1406,  when  English  ships 
were  going  to  Bordeaux,  they  entered  an  unfrequented  sea, 
and  four  vessels  from  Lynn  were  engulfed  in  a  whirlpool 
which  swallowed  up  the  flood  and  vomited  it  forth  again 
three  times  a  day.  The  Arabian  Nights  have  been  called 
sober  and  realistic  in  comparison  with  the  ideas  held  by  the 
medieval  mariner  of  the  wonders  and  dangers  of  the  unknown 
parts  of  the  world. 

86.  Piracy.  —  At   sea,   as   on   land,   the   merchant   faced 


76  A  HISTORY  OF  COMMERCE 

dangers  of  violence  which  were  probably  as  serious  an  obstacle 
to  the  growth  of  commerce  as  the  physical  difficulties  of  navi- 
gation. Ships  went  always  armed,  and  sailed  when  possible 
in  fleets  for  better  protection.  Sometimes  one  that  had  ven- 
tured out  alone  could  beat  off  its  enemies,  as  in  the  case  of  a 
trading  ship  from  Stralsund  which  was  attacked  in  1391  but 
won  a  complete  victory,  and  brought  back  (it  is  said)  100 
pirates,  packed  in  casks  with  only  the  heads  sticking  out,  for 
a  bloody  punishment.  Pirates  came  from  every  source.  An 
ordinary  merchantman  would  turn  pirate  if  it  met  a  weaker 
vessel  from  some  town  which  was  so  far  distant  or  so  weak 
that  repiisals  need  not  be  feared.  A  mariner  of  Winchelsea  in 
England,  who  had  seized  and  plundered  a  vessel  owned  by 
Dorsetshire  merchants,  became  mayor  of  Winchelsea  a  few 
years  later,  and  in  the  fifteenth  century  a  Canterbury  abbot 
was  convicted  of  plundering  a  wine  ship  and  was  forced  to 
make  restitution.  Even  ships  sent  out  by  the  public  author- 
ities for  protection  against  pirates  attacked  and  plundered 
ships  not  only  of  other  nationalities  but  of  their  own  too.  Six 
ships  which  had  been  organized  in  1316  to  protect  Berwick 
from  freebooters  harried  the  English  coast  to  the  south,  and 
the  fleet  of  the  Cinque  Ports  (five  towns  on  the  English  Channel), 
used  its  spare  time  in  preying  on  English  commerce  and  attack- 
ing English  towns. 

87.  Organized  piracy ;  privateering.  —  Piracy  became  a 
regular  profession,  in  which  partners  organized  for  greater 
efficiency.  The  "Victual  Brothers"  formed  an  organization, 
modeled  after  that  of  the  Knights  Templars,  for  carrying  on 
piracy;  their  motto  was  "God's  friend  and  all  the  world's 
enemy."  They  had  a  stronghold  at  Gotland,  in  the  Baltic 
Sea,  and  were  long  a  terror  to  traders  and  fishermen;  their 
power  was  broken  in  1394  only  by  a  fleet  of  thirty-five  ships 
sent  against  them.  A  fleet  of  Venetian  galleys  on  their  way 
north  were  attacked  off  Lisbon  in  1485  by  a  piratical  expedi- 
tion of  six  ships,  which  killed  and  wounded  over  four  hundred 
men  and  took  enormous  booty;  it  is  said  that  the  discoverer 


SEA   TRADE  77 

Christopher  Columbus  was  one  of  the  corsairs.  War  at  sea 
was  carried  on  even  more  barbarously  than  war  on  land. 
Crews  and  passengers  of  captured  merchant  vessels,  whether 
taken  after  resistance  or  not,  were  frequently  tossed  over- 
board, sometimes  with  their  hands  tied  behind  their  backs, 
or  were  hung  to  the  yards,  or  murdered  on  the  deck  in  cold 
blood. 

An  appearance  of  legitimacy  was  given  to  the  attack  on 
merchant  vessels  in  time  of  war;  "letters  of  marque"  were  not 
considered  necessary  to  justify  attacks  by  private  vessels 
against  merchant  vessels  of  the  enemy,  and  as  war  was  the 
rule  rather  than  the  exception  in  Europe  privateering  was 
nearly  constant.  During  the  Hundred  Years'  War  between 
England  and  France,  in  spite  of  booms  and  chains,  watches  and 
beacons,  almost  every  town  on  the  south  coast  of  England 
was  sacked  and  burnt  by  French  privateers.  Even  at  London 
the  streets  which  opened  on  the  river  were  defended  by  chains, 
to  hinder  a  landing  within  the  city,  and  the  people  thought  of 
building  high  stone  towers  on  both  sides  of  the  river,  with  a 
chain  stretched  between  them,  to  defend  the  shipping  from 
night  attacks. 

QUESTIONS  AND  TOPICS 

1.  Ships  and  exploits  of  the  Vikings.     [Beazley,  Prince  Henry,  chap. 
2;  C.  F.  Keary,  The  Vikings  in  western  Christendom,  N.  Y.,  1891,  chaps. 
5,  6,  9.] 

2.  In  connection  with  the  small  vessels  of  the  early  Middle  Ages  the 
reader  is  reminded  of  the  exploits  of  various  "captains"  of  the  present 
day  who  cross  the  ocean  alone,  and  he  might  profitably  hunt  up  a  descrip- 
tion of  one  of  the  boats  employed  and  compare  it  with  the  description  in 
the  text.     A  ton  is  100  cubic  feet  of  internal  volume. 

3.  If  the  reader  lives  at  a  trading  port  he  should  ascertain  the  tonnage 
and  rig  of  the  vessels  ordinarily  employed,  and  thus  prepare  himself  to 
understand  the  conditions  of  medieval  navigation. 

4.  Compare  the  medieval  galley  with  the  ancient  galley  described  in 
classical  histories.     [Beware  of  pictures  given  in  the  text-books;  many  are 
pure  products  of  the  imagination.] 

5.  Write  a  report  on  the  history  of  the  compass.     [Encyclopaedia 
Britannica;  consult  Poole's  Index  for  articles  in  recent  periodicals.] 


78  A  HISTORY  OF  COMMERCE 

6.  Measure  distances  in  sect.  82,  and  apply  them  to  the  sea-  or  lake- 
coast  of  the  U.  S. 

7.  Indicate  on  an  outline  map  of  Europe  the  position  of  the  ports 
named,  in  sect.  82,  using  the  conventional  signs  of  death  (f)  and  birth  (*) 
to  show  those  that  declined  and  those  that  gained  in  importance. 

8.  Write  a  report  on  the  credulity  of  early  sailors.     [Voyages  of  Sin- 
bad  the  Sailor  in  the  Arabian  Nights,  a  popular  romance  of  the  Indian 
trade  in  the  ninth  century;  Voyages  of  Sir  John  de  Mandeville,  N.  Y., 
Macmillan,  1900,  $1.50;  Selections  in  Cassell's  Library,  paper,  $.10.] 

9.  What  is  the  difference  between  a  government  war-vessel,  a  priva- 
teer, and  a  pirate?    [Dictionary  and  encyclopedia,  or  some  manual    of 
international  law.] 

BIBLIOGRAPHY 

Articles  and  bibliographies  by  *  Clowes  in  Traill's  Social  England; 
John  Fiske,  *  Discovery  of  America;  Alice  Law,  Notes  on  English  medieval 
shipping,  in  the  Economic  Review,  1898,  vol.  8;  Cornewall- Jones,  The 
British  merchant  service;  Lindsay,  History,  vol.  2. 


CHAPTER  X 
THE  LEVANT  TRADE 

88.  Wares  of  the  Levant  trade.     Slaves.  —  The  "  colonial 
products "  of  the  modern  world  (tea,  coffee,  spices,  etc.)  have 
familiarized  us  with  a  class  of  wares  which  cannot  be  produced 
at  home  and  are  imported  from  distant   countries.     In  the 
commerce  of  medieval   Europe  there  were  wares  like  these 
which  could  not  be  produced  near  the  place  where  they  were 
to  be  consumed,  because  of  the  severe  climate,  or  the  lack  of 
technical  skill,  and  yet  which  were  eagerly  desired  by  the 
upper  classes.     These  wares  were  obtained   from  Asia,   and 
formed  the  basis  for  an  Oriental  trade  which  was  one  of  the 
most  important  branches  of  medieval  commerce.     There  was 
one  ware  of  Oriental  trade  in  which  there  was  a  reciprocal 
exchange;  this  was  slaves.     Slaves  were  exported  from  Europe 
to  the  great  market  at  Cairo  in  Egypt,  and  were  imported 
from  western  Asia  and  Africa.     At  the  very  end  of  the  fifteenth 
century  there  were  said  to  be  3,000  slaves  in  the  single  city  of 
Venice.     Most   of  the  wares,   however,   flowed   in   only   one 
direction;  and  to  give  an  idea  of  the  character  and  importance 
of  the  trade  we  shall  preface  our  narrative  of  its  development 
by  a  description  of  the  chief  products  imported  into  Europe. 

89.  Spices.  —  Among  the  raw  materials  a  very  important 
place  was  taken  by  spices,  the  product  of  tropical  plants  and 
trees  which  thrive  only  in  a  few  parts  of  the  world  even  now. 
The  food  of  the  common  people  in  the  Middle  Ages  would  seem 
intolerably  coarse  and  monotonous  to  a  modern  laborer,  on 
whose  table  appear  regularly  products  from  all  parts  of  the 
world;  and  even  the  diet  of  the  rich  needed  a  great  deal  of 
condiment  if  it  was  to  be  palatable.     A  staple  import,  then, 

79 


80  A  HISTORY  OF  COMMERCE 

was  pepper,  the  berry  of  a  vine  growing  in  India  and  in  the 
islands  of  Asia,  which  was  used  in  Europe  by  all  who  could 
afford  the  luxury  of  a  seasoning.  For  common  use  the  price 
was  prohibitive.  Cloves,  from  the  Molucca  Islands,  were  even 
more  expensive,  costing  two  and  three  times  as  much  as  pepper; 
they  were  used  for  seasoning  food  and  drink,  and  also  as 
medicine.  Cinnamon,  nutmegs,  and  mace  served  similar  pur- 
pose, and  ginger  took  a  place  among  medieval  luxuries  of  this 
kind  second  only  to  pepper. 

90.  Drugs ;   perfumes ;   sugar.  —  Beside   the   spices   which 
were  employed  in  medicine  by  medieval  apothecaries  many 
wares  were  imported  which  served  solely  or  mainly  for  drugs. 
Among  them  were  rhubarb,  aloes,  balsam,  borax,  gum  traga- 
canth,  gum  benzoin,  cubebs,  cardamoms,  camphor,  etc. 

Sugar  belongs  in  this  list  of  wares,  on  the  border-line 
between  medicines  and  table  delicacies.  It  was  far  too  costly 
to  be  an  article  of  common  consumption,  and  the  gift  of  a 
small  piece  of  loaf  sugar  implied  far  more  devotion  than  would 
be  evidenced*  now  by  a  present  of  the  finest  confectionery. 
It  found  its  main  employment  in  medicine,  therefore,  and 
though  it  was  used  in  increasing  quantities  for  sweetening  food 
and  drink  and  for  preserving,  native  honey  was  the  medium 
commonly  used. 

91.  Precious  stones;  preponderance  in  general  of  luxuries 
over  articles  of  general  utility.  —  Another  category  of  wares, 
which  found  a  ready  market  among  the  upper  classes  of  me- 
dieval Europe  was  precious  stones.    The  part  of  Europe  which 
now  produces  a  considerable  quantity  of  these,  the  region  of 
the  Ural  Mountains,  was  still  unexplored;  the  source  of  supply 
in  the  New  World  was  of  course  unknown;  and  Europe  looked 
entirely  to  Asia  and  Egypt  for  its  supply.     Diamonds,  emeralds, 
rubies,  sapphires,  lapis  lazuli,  etc.,  were  collected  in  various 
parts  of  the  East,   passed  through  innumerable  hands,  and 
finally  found  a  resting-place  among  the  jewels  of  some  great 
lord  or  lady  of  the  West.     Pearls  came  from  the  Indian  Ocean, 
and  ivory  from  Africa,  through  the  hands  of  Asiatic  traders. 


THE  LEVANT  TRADE  »  81 

Europe  was  able  to  make  a  return  in  kind  from  the  Mediter- 
ranean coral  fisheries;  the  greater  part  of  European  coral  was 
exported  to  meet  the  demand  in  the  East,  being  carried  to 
Egypt  by  Spanish  or  Italian  ships,  and  distributed  from  there 
to  India  and  China. 

The  reader  who  has  followed  thus  far  this  category  of 
eastern  products  must  be  struck  by  the  preponderance  in  it 
of  costly  luxuries  over  articles  of  general  consumption.  The 
expenses  of  transportation  over  great  distances  and  through 
dangerous  districts  were,  in  fact,  so  great  that  most  of  the 
Eastern  wares  had  necessarily  to  comprise  great  value  in  a 
small  bulk,  and  sought  their  market  only  among  the  upper 
classes  of  Europe,  who  could  afford  to  pay  well  to  gratify  their 
desires. 

92.  Dyestuff s ;  alum.  —  Among  the  raw  material  brought 
from  the  East  there  was  only  one  important  class  of  wares 
which  served  manufacturing  industries,  the  dyestuffs.  Indigo 
(Greek,  Indikon,  Indian)  came  from  the  East  as  its  name 
implies,  the  chief  staple  for  it  being  Bagdad.  It  gives  a  fast 
and  deep  blue  and  had  been  imported  in  Europe  even  in 
ancient  times ;  with  the  revival  of  commerce  after  the  Crusades 
it  became  again  an  article  of  commerce,  and  was  used  con- 
stantly thereafter  as  a  dyestuff,  in  spite  of  the  attempt  to 
substitute  for  it  the  native  woad,  an  herb  of  the  mustard 
family.  Some  of  the  red  dyes  were  produced  in  Europe, 
notably  madder,  mentioned  in  one  of  Charlemagne's  laws,  and 
the  scarlet  or  carmine  obtained  from  the  kermes  insect  in 
Southern  France  and  Spain.  Both  of  these  dyes  were  imported 
to  some  extent,  however,  and  another  red  dye  which  was  an 
important  import  was  Brazil-wood.  The  name  suggests  an 
American  origin,  but  was  given  it  in  fact  because  its  redness 
made  it  seem  like  glowing  coals  (cf.  English  brazier),  and  the 
South  American  country  received  its  name  later  from  the  tree 
found  growing  in  it.  Brazil-wood  was  brought  to  Europe  in 
blocks  and  was  then  ground  up  for  use  in  dyeing  and  painting. 
A  common  yellow  dye  of  the  Middle  Ages,  saffron,  was  also 


82  A  HISTORY  OF  COMMERCE 

imported  when  the  best  quality  was  desired,  and  yellow  arsenic 
(orpiment)  was  used  as  a  pigment.  Lac  (shellac)  was  used  for 
a  dye  as  well  as  for  varnish.  More  important  than  any  of  the 
separate  dyes  was  alum,  which  came  to  be  regarded  as  indis- 
pensable for  fixing  the  color  when  wool  or  silk  had  been  dyed 
in  the  piece.  This  was  procured  mainly  in  Asia  Minor,  and  was 
one  of  the  most  highly  prized  products  of  the  eastern  trade. 

93.  Other  raw  materials  of  industry.  —  In  comparison  with 
the  dyes  most  other  raw  materials  of  industry  were  unimpor- 
tant as  objects  of  trade.     Cotton  (Arabic  kotn)  was  imported 
both  in  its  finished  form  and  as  a  raw  material.     The  cotton 
manufacture  in  Europe  had,  of  course,  nothing  like  its  present 
importance,  but  it  was  already  well  established  in  Germany, 
where  a  staple  cloth  was  made  out  of  a  mixture  of  cotton  and 
flax,  and  it  required  more  of  the  raw  cotton  than  the  planta- 
tions of  southern  Europe  could  supply.     Small  amounts  of 
flax  were  imported  from  Egypt,  because  of  the  superior  quality 
of  the  product. 

Silk-  was,  however,  the  only  textile  material  which  was  a 
very  important  ware  in  its  raw  form.  The  culture  of  the 
silkworm,  which  had  been  carried  on  for  centuries  in  China, 
but  so  far  as  possible  had  been  kept  a  secret  from  other  peoples, 
spread  gradually  to  the  West  and  was  introduced  into  Europe 
by  the  Emperor  Justinian  in  the  sixth  century.  The  Arabians 
introduced  mulberry  plantations  and  the  raising  of  silkworms 
into  Sicily  and  Spain,  and  the  culture  thrived  so  far  as  to 
leave  a  surplus  for  export  after  supplying  the  home  manu- 
factures. Christian  peoples,  however,  did  not  succeed  so  well 
in  the  culture;  France  could  as  yet  furnish  no  appreciable 
quantity  of  raw  silk,  and  the  output  in  Italy  was  unsatisfactory 
both  in  respect  to  quality  and  quantity.  The  growing  silk 
manufacture  in  Europe  had  therefore  to  meet  its  deficiency  by 
trade  with  the  East,  getting  part  of  its  supply  of  raw  material 
from  China  and  Persia,  but  the  bulk  from  the  countries  about 
the  Caspian  Sea. 

94.  Textile  imports ;  exports  from  Europe.  —  Among  manu- 


THE  LEVANT  TRADE  83 

factures  imported  from  the  East  textiles  held  the  most  impor- 
tant place.  Europe  was  strong  enough  in  the  manufacture  of 
linen  and  woolen  goods  to  export  them  in  considerable  quan- 
tities to  Asia,  but  it  lacked  in  the  manufacture  of  cotton  and 
silk  not  only  raw  material  but  the  technical  skill  to  compete 
with  the  artisans  of  the  East;  and  imported  large  quantities 
of  finished  cloth.  Dignitaries  of  the  church  and  the  merchant 
princes  of  the  late  Middle  Ages  demanded  for  clothing  and  for 
furniture  fabrics  of  finer  quality  and  of  greater  quantity  than 
the  looms  established  by  the  Mohammedans  in  Spain  and 
Sicily  could  supply,  and  sought  them  chiefly  in  the  countries 
bordering  the  eastern  end  of  the  Mediterranean.  From  this 
district  came  a  great  variety  of  silks,  woven  often  as  brocades 
with  gold  or  silver  threads,  and  the  early  types  of  velvet  and 
satin.  Silk  goods  formed  the  chief  but  not  the  sole  con- 
stituent of  the  textile  imports;  with  them  came  fine  cottons 
from  India,  cloth  made  from  the  hair  of  camels  and  other 
animals,  and  linen  from  Egypt  and  Syria,  which  surpassed  all 
of  western  make.  Europe  depended  also  on  the  East  for  fine 
china  and  glass. 

Before  the  end  of  the  Middle  Ages  the  Italian  silk  manufac- 
ture had  grown  strong  enough  to  turn  the  tide,  and  to  export 
to  the  East.  Through  the  greater  part  of  this  period,  however, 
the  only  European  textiles  exported  to  Asia  were  the  woolens 
and  common  linens  which  were  produced  in  England,  Flanders, 
and  other  of  the  more  advanced  countries.  Besides  these 
manufactures  the  main  exports  consisted  of  raw  materials: 
wool,  hides,  metals  (gold,  silver,  and  tin),  and  food  stuffs. 

95.  Revival  of  Oriental  trade  about  1000,  under  the  leader- 
ship of  Italians.  —  As  commerce  with  the  East  had  lasted 
throughout  the  period  of  Roman  rule,  and  had  cultivated 
tastes  among  rich  Romans  and  provincials  which  could  only 
be  satisfied  by  its  continuance,  we  find  evidence  even  in  the 
Dark  Ages  that  it  was  still  carried  on.  A  document  dated  716 
shows  that  the  rich  monastery  of  Corby  in  northern  France 
received  pepper,  cloves,  and  other  spices  from  southern  France; 


84  A  HISTORY  OF  COMMERCE 

and  Marseilles  maintained  its  commercial  relations  with  the 
East.  The  trade  in  this  period,  however,  was  carried  on 
almost  entirely  by  Syrians  and  Jews;  the  peoples  of  western 
Europe  had  not  yet  learned  to  profit  by  active  participation 
in  it,  and  it  had  sunk  to  comparative  insignificance.  The 
revival  came  about  the  year  1000  with  the  general  awakening 
of  economic  life  in  Europe  which  had  for  its  most  striking 
feature  the  growth  of  towns.  As  the  possibilities  for  trade 
became  greater,  and  the  demand  for  luxuries  kept  pace  with 
them,  the  eastern  trade  felt  a  powerful  stimulus,  and  grew 
rapidly  in  importance.  It  was  now  carried  on  mainly  by  the 
people  who  were  destined  to  control  it  until  the  great  dis- 
coveries left  them  outside  the  path  of  progress,  —  the  Italians. 
A  group  of  towns  in  the  far  south  of  the  Italian  peninsula,  Bari, 
Trani,  Brindisi,  and  Taranto,  took  advantage  of  their  nearness 
to  the  Levant  (the  eastern  end  of  the  Mediterranean)  to  estab- 
lish commercial  relations  which  returned  large  profits  and 
developed  into  a  considerable  trade.  Another  group  of  towns 
near  the  Bay  of  Naples,  of  which  Amalfi  was  the  chief,  shared 
in  the  profits  of  this  trade,  and  still  another  town,  standing 
alone  near  the  head  of  the  Adriatic  Sea,  Venice,  began  already 
to  assume  the  commanding  position  in  the  Oriental  trade  which 
she  wras  destined  to  make  good  against  all  rivals. 

96.  Routes  between  Asia  and  Europe.  —  The  main  routes 
serving  as  the  paths  of  trade  between  Asia  and  Europe  during 
the  Middle  Ages  were  three  in  number.  The  central  route, 
the  oldest  and  for  much  of  this  period  the  most  important, 
began  at  the  head  of  the  Persian  Gulf;  after  the  foundation  of 
Bagdad  near  the  site  of  ancient  Babylon  (about  750  A.D.)  it 
found  there  its  first  important  stopping-place.  Thence  a  cara- 
van route  led  around  and  through  the  desert  to  Damascus, 
where  it  branched  off  to  the  coast  of  ancient  Phoenicia  in  one 
direction,  to  Egypt  in  the  other.  Aside  from  partial  inter- 
ruptions this  route  was  used  steadily  until  near  the  close  of 
the  Middle  Ages,  when  it  was  partially  blocked  and  commerce 
was  forced  to  the  south. 


THE  LEVANT  TRADE 


85 


The  southern  route,  reaching  Europe  through  Egypt,  was 
mainly  maritime.  It  had  to  contend  with  two  great  difficul- 
ties: the  great  stretch  of  open  water  presented  by  the  Indian 
Ocean,  and  the  difficulty  of  navigation  in  the  Red  Sea,  on  the 
west  coast  of  which  strong  north  winds  blow  through  much  of 
the  year.  The  first  of  these  difficulties  became  less  serious  in 
the  Christian  era,  as  navigators  learned  to  time  their  voyages 


TRADE  ROUTES  BETWEEN  ASIA  AND  EUROPE 

The  map  shows  only  the  chief  lines  of  trade,  omitting  side  routes  for  the  sake  of 
clearness.  See  the  text,  sect.  96,  for  description  of  the  uses  to  which  the  routes 
were  put. 

to  suit  the  monsoons,  the  winds  blowing  at  regular  seasons  in 
the  Indian  Ocean.  Vessels  could  leave  an  Egyptian  port  in 
July  and  reach  India  by  the  southwest  monsoon  in  little  over 
two  months.  The  second  difficulty  was  obviated  by  starting 
for  the  East  not  from  the  Gulf  of  Suez  but  from  a  point  part 
way  down  the  coast  (Berenice),  reached  by  a  trip  on  the  Nile 
and  by  caravan.  This  route  became  of  greatest  importance 
at  the  close  of  the  Middle  Ages. 


86  A  HISTORY  OF  COMMERCE 

The  third  route,  entirely  overland,  led  from  India  across 
the  mountains  to  the  River  Oxus,  where  it  was  joined  by  a 
caravan  route  from  China.  Branching  near  Bokhara,  one  part 
led  to  the  Caspian  Sea  and  up  the  Volga,  another  left  the 
Caspian  to  the  north  and  reached  Europe  at  the  Black  Sea 
(Trebizond,  Constantinople).  This  route  traversed  high  moun- 
tain passes  and  long  desert  stretches,  and  was  suitable  only  for 
the  carriage  of  valuable  articles  of  small  bulk.  For  about  two 
centuries  after  1250  it  was  kept  open  by  the  Mongols  or  Tartars, 
who  lived  on  good  terms  with  the  Christians;  then  it  was 
blocked  by  the  Turks. 

97.  Character  of  the  crusades ;  number  of  crusaders.  —  To 
assign  to  economic  motives  the  chief  part  in  the  crusades 
would  be  a  distortion  of  the  great  movement  which  marked 
the  life  of  Europe  in  the  two  centuries  following  1100.  Not 
hope  of  gain  but  vague  ideals  of  this  life  and  the  life  to  come 
drove  hundreds  of  thousands  of  men  to  the  perilous  journey 
to  the  Holy  Land  from  which  so  few  returned.  Indirectly 
commerce  had  its  share  in  this  movement;  it  had  drawn  the 
peoples  closer  together,  stimulated  curiosity  and  broadened 
interests.  Men  sought  an  outlet  for  their  surplus  energy,  and 
a  relief  from  the  monotony  of  medieval  life;  ascetic  ideals 
imposed  upon  them  holy  tasks  which  they  could  fulfil  to  the 
benefit  of  their  souls.  The  effect  can  be  traced  in  an  increase 
in  the  pilgrimages  of  individuals  to  holy  places.  The  people  of 
Europe  needed  only  organization  and  a  leader  to  unite  their 
scattered  forces;  they  found  their  organization  in  the  church, 
their  leader  in  the  Pope  and  his  delegates,  their  goal  in  the 
delivery  of  the  Holy  Sepulcher  from  the  hands  of  the  infidels 
who  were  abusing  Christian  pilgrims. 

Any  estimate  of  the  numbers  who  engaged  in  the  crusades 
must  be  pure  guesswork.  The  statistics  of  medieval  chron- 
icles, always  notoriously  inaccurate,  seem  to  reach  the  acme 
of  unreliability  in  the  figures  of  the  crusaders  engaged  in  the 
different  expeditions.  The  main  body  of  the  first  crusade, 
which  started  in  1095,  was  compared  in  number  with  the 


THE  LEVANT  TRADE  87 

sands  of  the  seashore  or  the  stars  in  heaven;  even  moderate 
contemporaries  made  it  600,000  or  at  least  300,000  strong; 
perhaps  it  was  really  100,000.  There  were  six  or  eight  separate 
expeditions  lasting  down  to  1270,  and  we  may  say  that  a 
million  men,  roughly  speaking,  and  probably  many  less  rather 
than  more,  took  part. 

98.  Commercial  aspect  of  the  crusades.  —  Even  the  trans- 
portation of  this  number  of  men,  with  their  baggage  and 
equipment,  must  have  been  a  great  stimulus  to  the  growth  of 
Mediterranean  shipping.  The  first  crusade  went  almost  en- 
tirely by  land,  but  the  sufferings  and  losses  were  so  great  that 
crusaders  were  driven  to  the  sea  route,  and  this  became  grad- 
ually the  regular  way  of  reaching  the  Holy  Land.  Italian 
merchants  accompanied  the  expedition  from  the  beginning, 
not  as  real  crusaders  but  as  contractors  for  transportation  and 
supplies,  turning  both  the  needs  and  the  successes  of  the 
crusaders  to  their  commercial  profit.  A  fleet  from  Genoa  and 
Pisa  accompanied  the  first  crusade  along  the  coast  of  Syria, 
selling  provisions.  The  Venetians  waited  until  Jerusalem  had 
been  taken;  then  fitted  out  a  fleet  which  fought  the  Pisans, 
quarreled  with  the  Greeks,  and  in  return  for  very  slight  ser- 
vices rendered  to  the  crusaders  demanded  that  in  every  city 
captured  they  should  have  a  market,  church,  and  freedom 
from  taxes.  "  Whilst  the  warriors  of  Christendom  were  fighting 
for  glory,  for  kingdoms,  or  for  the  tomb  of  Christ,  the  merchants 
of  Venice  fought  for  counting-houses,  stores,  or  commercial 
privileges."  "The  other  crusaders  obeyed  the  new  impulse, 
the  Venetians  utilized  it." 

The  fourth  crusade,  starting  s,oon  after  1200,  was  fairly 
captured  by  the  Venetians  and  turned  into  a  commercial 
expedition  for  their  profit.  When  the  time  for  starting  came, 
the  feudal  knights,  improvident  as  ever,  could  not  pay  the 
sum  agreed  on  for  their  transportation,  and  Venice  used  her 
power  over  them  as  debtors  to  force  them  to  aid  her,  first  to 
capture  Zara  on  the  Adriatic,  a  Christian  city  but  a  commercial 
rival,  then  to  take  Constantinople  itself,  the  key  to  the  trade 


88  A  HISTORY  OF  COMMERCE 

of  the  Black  Sea.  The  crusade  accomplished  nothing  against 
the  infidels;  it  was  merely  a  means  by  which  Venice  built  up 
her  commercial  and  colonial  empire  at  the  expense  of  other 
Christians. 

99.  Effect  of  the  crusades  on  knowledge  of  the  East  and  of 
eastern  wares.  —  Aside  from  the  help  which  the  crusades  gave 
the  Italians  in  building  up  their  fleets  and  in  establishing 
trading  posts  or  colonies  in  the  East,  they  were  of  no  less 
importance  in  extending  the  market  for  eastern  wares  in 
Europe.  The  crusaders  lost  their  provincialism,  and  acquired 
new  fashions  (shaving  the  beard  and  bathing);  they  became 
acquainted  with  fine  stuffs  and  dyes  and  were  no  longer  satisfied 
with  the  coarse  products  of  home.  The  European  vocabulary 
was  not  large  enough  to  give  names  to  the  new  acquisitions, 
and  we  can  trace  back  to  this  period  many  words  which 
were  borrowed  from  Arabic,  the  common  language  of  the 
Mohammedans:  alcove,  sofa,  mattress,  talisman,  elixir;  many 
of  commercial  significance,  bazar,  tariff,  corvette,  barracks. 
Not  only  the  words  but  the  things  themselves  became  native 
in  many  cases;  the  crusades  spread  in  Europe  the  cultivation 
of  the  lemon,  apricot,  watermelon,  rice,  and  sugar  cane.  Euro- 
pean literature  described  the  marvels  of  the  Orient,  the  silks  of 
Syria,  the  tapestries  of  Persia,  the  precious  stones  and  per- 
fumes of  Arabia;  the  names  of  eastern  countries  became  familiar 
and  knowledge  of  geography  widened  rapidly. 

QUESTIONS  AND  TOPICS 

1.  Selecting  any  one  among  the  more  important  wares,  sects.  88-94. 
write  a  report  on  its  production,  uses,  value,  and  history  as  an  article  of 
commerce.     [Encyclopedia;    commercial    geographies;    encyclopedias    of 
commerce    and    of   manufactures,    as    those    by  McCulloch,    Waterston, 
Romans,  Ure-1 

2.  Taking  British  India  as  a  characteristic  source  for  the  Eastern 
wares,   contrast  the  exports  then  and  now.     [Statesman's  Year-Book, 
index,  India,  exports.] 

3.  What  seaports  of  those  named  in  sect.  95  are  still  of  importance? 
[Statesman's  Year-Book,  index,  Italy,  shipping.] 


THE  LEVANT  TRADE  89 

4.  What  evidences  have  the  other  ports  left  of  their  former  greatness? 
[Encyc.;  *  Baedeker's  guide-books.] 

5.  Which  one  of  the  three  routes,  sect.  96,  is  now  the  most  important? 

6.  What  railways  have  been  constructed  or  proposed  along  the  line 
of  ancient  routes?    [See  a  good  atlas,  and  note  the  proposed  railway  from 
Asia  Minor  through  the  Mesopotamian  valley  to  the  Persian  gulf.     What 
effect  may  this  railway  have  on  the  importance  of  Constantinople?] 

7.  Read  a  description  of  one  of  the  ancient  centers  of  trade  in  modern 
times.     [Consult  books  by  modern  travelers  in  south-western  Asia.] 

8.  Where  now  can  be  found  pilgrimages  like  those  of  the  Christians 
to  Jerusalem?    What  is  their  commercial  influence?     [See  Mecca  in  the 
encyclopedia;  and  in  Poole's  Index.] 

9.  How  does  the  average  number  of  crusaders  going  per  year  to 
Palestine  compare  with  the  number  of  Americans  going  abroad? 

10.  Prepare,  from  descriptions  in  the  current  history  manuals  or 
from  a  historical  atlas  (Droysen's,  for  example),  a  map  showing  the  route 
of  each  crusade;  number  each  route  that  the  development  of  the  sea-route 
may  be  more  apparent. 

11.  Show  the  development  of  Venice  in  the  period  of  the  crusades, 
by  comparing  her  commerce  and  power  at  the  two  dates  limiting  the 
period.     [References  in  next  chapter.] 

BIBLIOGRAPHY 

Aside  from  the  current  manuals  of  the  history  of  commerce  very  little 
has  appeared  in  English  on  the  routes  and  wares  of  'the  Levant  trade. 
Lincoln  Hutchinson,  *  Oriental  trade  and  the  rise  of  the  Lombard  Com- 
munes, Quarterly  Journal  of  Economics,  1901-2,  16:  413-432  (esp.  415- 
421),  can  be  recommended;  and  Cheyney,  **  Eur.  background,  has  two 
excellent  chapters  on  the  subject  (Levant  wares  in  chap.  1;  routes  in 
chap.  2). 

The  reader  will  have  to  rely  largely  on  accounts  of  the  crusades,  in 
which  there  are  incidental  references  to  commerce:  Adams,*  Civ.;  Robin- 
b'on  (*  bibliography);  Emerton,  Med.  Eur.  (bibliog.);  etc. 


CHAPTER  XI 
COMMERCE  OF  SOUTHERN  EUROPE 

100.  Position  of  Venice ;  early  history.  —  The  course  of  the 
eastern  trade  can  best   be  followed  in  connection  with  the 
fortunes  of  the  city  of  Venice  which  still  shows,  in  the  splendid 
palaces  lining  its  canals,  the  evidence  of  its  former  greatness. 

The  beginnings  of  the  city  are  traced  back  to  the  period  of 
barbarian  invasions  when  fugitives  from  the  mainland  sought 
shelter  on  the  islands  a  short  distance  from  shore.  The  inhab- 
itants, thus  protected  from  the  unending  wars  of  the  feudal 
period,  were  at  the  same  time  forced  to  seek  their  living  on 
the  sea,  first  as  fishermen  but  more  and  more  as  merchants. 
The  Italian  conquests  of  the  Emperor  Justinian  (about  500  A.D.), 
brought  them  into  relations  with  Constantinople  which  were 
maintained  by  trade  and  frequent  embassies.  Even  before 
the  year  1000  the  Venetians  had  won  a  secure  position  in 
Constantinople  by  an  imperial  charter  which  granted  them, 
among  other  privileges,  freedom  from  the  vexatious  tolls  and 
delays  imposed  by  subordinate  customs  officers.  Still  more 
important  was  a  charter  of  1082,  which  granted  lands  and 
buildings  in  Constantinople  for  a  special  Venetian  quarter, 
which  freed  the  Venetians  from  all  taxes  and  at  the  same  time 
required  their  trade  rivals,  the  Amalfitani,  to  pay  taxes  to 
them  for  the  right  to  trade. 

101.  Expansion  of  Venetian  empire  during  the  crusades.  — 
Before   the   crusades,   therefore,   Venice   had   a   commanding 
position  in  the  eastern  trade.     It  confirmed  this  position  by 
a  series  of  bitter  struggles  with  its  rivals,  especially  the  cities 
of  Genoa  and   Pisa  which  were  rising  to  great  prominence. 
These  cities  imperiled  for  a  time  Venetian  control  of  the  Black 

90 


COMMERCE  OF  SOUTHERN  EUROPE 


91 


92  A  HISTORY  OF  COMMERCE 

Sea  trade  at  Constantinople;  but  the  outcome  of  the  fourth 
crusade  (1204),  was  a  victory  for  Venice  which  left  her  su- 
premacy for  the  time  unquestioned. 

In  the  share  taken  by  them  in  the  partition  of  the  Eastern 
Empire  the  Venetians  showed  that  common  sense  which  is 
always  found  at  the  bottom  of  all  their  actions.  They  left  to 
the  crusaders  the  inland  provinces  and  took  for  themselves 
the  coast-towns  and  islands  which  promised  the  best  com- 
mercial returns  and  were  easiest  to  defend.  In  Constanti- 
nople itself  they  took  a  large  part  of  the  city,  in  which  their 
podestat  ruled  almost  as  an  independent  sovereign.  At  places 
commanding  the  all-important  sea  route  to  the  East,  in  the 
Peloponnesus  or  Morea,  in  Crete  and  in  Euboea,  naval  stations 
were  established  under  the  control  of  officers  sent  out  by  the 
home  government.  The  strict  rules  by  which  these  officers 
were  governed  gives  an  insight  into  the  discipline  which  existed 
in  the  Venetian  foreign  service.  In  every  place  in  which  the 
Venetians  founded  a  principality  their  capital  was  surrounded 
by  Italian  colonies;  there  where  one  found  formerly  only  nests 
of  pirates,  the  terror  of  Venetian  commerce,  one  found  now 
friendly  ports,  refuges  fortified  and  secure,  where  Venetian 
captains  and  merchants,  certain  of  a  good  reception,  could  ask 
asylum  and  protection. 

102.  Extent  of  Venetian  commerce.  —  Thanks  to  the  colo- 
nial empire  which  they  established  the  Venetians  controlled 
the  trade  of  the  eastern  Mediterranean  more  efficiently  than 
Great  Britain  has  controlled  the  world  commerce  of  the  nine- 
teenth century;  the  field  of  operations  was  narrower,  and 
"trade  followed  the  flag"  in  those  early  times  as  it  has  never 
done  since.  Foreigners  might  trade  if  they  would  pay  suffi- 
ciently for  the  privilege;  without  this  recognition  of  their 
inferiority  they  were  public  enemies  to  be  given  short  shrift. 

Venice  established  her  colonies  or  trading  factories  not  only 
along  the  shore  of  the  eastern  Mediterranean  and  the  Black 
Sea;  Venetian  merchants  penetrated  deep  into  Russia,  and 
into  Central  Asia  through  the  Crimea.  So  bold  were  their 


COMMERCE  OF  SOUTHERN  EUROPE  93 

enterprises  that  the  home  government,  fearful  for  its  interests, 
passed  a  law  to  limit  their  extent.  "Dalmatia,  Albania, 
Romania,  Greece,  Trebizond,  Syria,  Armenia,  Egypt,  Cyprus, 
Candia,  Apulia,  Sicily  and  other  countries,  kingdoms  and 
islands  were  the  fruitful  gardens,  the  proud  castles  of  our 
people,  where  they  found  again  profit,  pleasure,  security." 
The  old  chronicler  names  but  one  side  of  the  equation  of 
trade;  the  products  from  all  these  countries  and  from  the  far 
East  behind  them  were  brought  to  Venice  to  be  exchanged  for 
the  products  of  the  West.  Martino  da  Canale  says  of  an  earlier 
period  what  must  at  any  rate  have  been  true  of  his  own  (thir- 
teenth century) :  "  The  Venetians  went  about  the  sea  here  and 
there,  and  across  the  sea  and  in  all  places,  and  bought  mer- 
chandise and  brought  it  to  Venice  from  every  side.  Then 
there  came  to  Venice  Germans  and  Bavarians,  French  and 
Lombards,  Tuscans  and  Hungarians,  and  every  people  that 
lives  by  merchandise,  and  they  took  it  to  their  countries." 

103.  Development  of  the  institutions  of  commerce  in  Venice. 
-  Reference  has  been  made  in  an  earlier  chapter  to  the  Vene- 
tian regulations  on  the  building,  rigging,  and  manning  of  ships, 
which  anticipated  by  many  centuries  similar  legislation  in  the 
countries  of  northern  Europe.     The  extent  of  her  commercial 
relations  led  Venice  to  a  development  of  book-keeping  and 
banking  which   made  her  in  these  important   branches  the 
instructor  of  Europe,  to  whom  the  sons  of  wealthy  merchants 
in  other  countries  were  sent  to  school.     The  reader  will  appre- 
ciate how  great  is  the  debt  of  other  countries  to  Italy  when 
he  reflects  on  the  number  of  Italian  words  having  to  do  with 
commerce  and  banking  which  have  become  current  in  general 
commercial  use;  among  them  are  conto,  conto  corrente,  porto, 
risico,  disconto,  brutto,  netto,  deposito,  folio,  bilanza,  etc. 

104.  Venetian  commercial  policy.  —  The  Venetian  commer- 
cial policy  may  be  described  briefly  as  the  maintenance  of  as 
strict  a  monopoly  as  possible  in  the  trade  east  of  Italy,  and 
the  regulation  of  trade  between  Venice  and  the  North  or  West 
which  would  give  the  Venetians  the  greatest  advantage  when 


94 


A  HISTORY  OF  COMMERCE 


they  sold  their  Oriental  wares  to  other  Europeans.  This  policy, 
as  well  as  the  material  character  of  the  commerce,  can  be 
studied  in  connection  with  the  two  great  branches  of  Venetian 


TRADE  ROUTES 

BETWEEN 

GERMANY  AND  ITALY 


The  different  routes  varied  in  importance  at  different  periods,  and  some  routes  were 
used  besides  those  indicated  on  the  map.  The  Brenner  Pass  was  always  of  great 
importance  to  Venetian  trade  ;  the  St.  Gothard  Pass  was  not  opened  until  the 
thirteenth  century. 

trade  in  Europe,  the  overland  commerce  with  Germany,  and 
the  sea  commerce  with  northwestern  Europe. 

105.   Overland   trade  with  Germany.  —  As  the   Venetians 


COMMERCE  OF  SOUTHERN  EUROPE  95 

were  essentially  a  sea-faring  people,  and  as  it  was  easier  to 
reach  the  large  cities  of  central  and  southern  Germany  by 
land  than  by  sea,  they  took  the  passive  part  in  their  German 
trade,  staying  at  home  and  allowing  the  Germans  to  come  to 
them  for  wares.  The  trip  overland  from  central  Germany 
took  roughly  two  weeks  or  a  little  less;  trade  letters  of  the 
fifteenth  century  were  a  month  or  more  on  the  way  between 
Venice  and  Bruges.  Different  routes  were  chosen  according 
to  the  starting-point  of  the  journey.  The  chief  route  was  that 
leading  over  the  Brenner,  one  of  the  lowest  of  the  great  Alpine 
passes,  lying  between  Augsburg  in  Germany  and  Verona  in 
Italy;  but  very  often  the  merchant  struck  off  to  the  East 
before  reaching  Verona  into  the  valley  of  the  Drave  or  the 
Brenta.  Coming  from  the  East,  from  Vienna,  for  instance,  the 
Semmering  pass  was  commonly  chosen. 

106.  Strict  control  over  German  merchants  in  Venice.  — 
On  reaching  Venice  the  merchant  was  put  at  once  under  strict 
supervision.  He  could  not  choose  his  own  lodgings,  but  must 
stay  at  the  "Fondaco  dei  Tedeschi"  (German  factory,  using 
that  word  in  its  earlier  sense  of  a  trading  post).  This  was  a 
building  (in  its  later  form  a  handsome  palace  now  used  as  a 
government  office)  which  belonged  to  the  city,  and  which 
served  at  once  as  a  hotel,  a  warehouse,  and  an  office  for  con- 
trolling the  trade.  When  a  merchant  arrived  he  was  disarmed 
and  given  a  room;  a  careful  list  was  made  of  all  his  wares, 
which  served  as  a  basis  for  the  government  dues;  and  an 
inspector  was  assigned  to  him.  This  inspector  acted  as  an 
interpreter  and  as  a  broker,  helping  the  merchant  make  his 
bargains,  but  it  would  be  a  great  mistake  to  suppose  that  he 
was  appointed  mainly  to  serve  the  merchant's  convenience; 
his  main  business  was  to  "shadow"  the  merchant  constantly, 
to  see  that  he  broke  none  of  the  numerous  regulations  designed 
to  assure  to  the  government  its  dues  and  to  the  Venetian 
people  their  profits.  Germans  could  bring  to  Venice  only  the 
wares  of  their  own  country  and  of  northeastern  Europe,  be- 
cause the  Venetians  wanted  to  carry  on  themselves  the  trade 


96  A  HISTORY  OF  COMMERCE 

with  Flanders;  Germans  could  trade  with  no  other  foreigners 
in  Venice,  and  could  not  trade  even  among  themselves,  in 
order  that  the  Venetians  might  have  the  sole  market;  they 
must  sell  out  their  whole  stock  in  Venice,  without  the  option 
of  withdrawing  part  of  it  and  carrying  it  further.  One  is 
tempted  to  ask  why  the  Germans  came  to  Venice  at  all,  to 
submit  to  such  severe  restrictions.  The  answer  is  easy;  they 
had  no  other  place  to  go  to,  for  the  wares  they  wanted.  Thanks 
to  her  position  and  to  her  skill  in  trade  and  war  Venice  had  a 
monopoly  of  Oriental  wares  which  enabled  her  for  some  time 
to  make  what  regulations  she  pleased  without  fear  of  losing 
her  customers. 

107.  Importance  of  the  trade  between  Venice  and  Germany. 
—  The  German  trade  in  Venice  amounted,  according  to  an 
estimate  of  the  fifteenth  century,  to  a  million  ducats  a  year, 
and  the  ducat  of  this  period  was  worth  considerably  more 
than    the    modern    dollar.     It    supplied    Germany    with    the 
coveted  eastern  wares  which  we  have  already  enumerated,  and, 
moreover,  with  some  of  the  products  of  Venetian  manufactures, 
which  were  then  highly  developed  and  which  were  stimulated 
by    protective    tariffs.     These    manufactures    included    glass, 
which  is  even  now  a  specialty  of  the  city,  fine  textiles,  weapons, 
paper,  etc.     The  Venetian  trade,  on  the  other  hand,  furnished 
to  Germany  a  market  for  her  metals  (gold,  silver,  iron,  copper, 
lead,  tin),  furs,  twine,  rosaries,  and  manufactures  of  leather 
and  horn,  and  the  coarser  textiles. 

108.  Commerce  by  sea  with  northwestern  Europe.  —  With 
the  countries  west  of  Germany  Venice  carried  on  an  "active" 
commerce;  that  is,  instead  of  waiting  for  foreigners  to  come 
to  her  she  brought  the  wares  to  them,  as  she  could  well  do  by 
the  sea  route.     The  crusade  of  1204,  to  which  we  have  already 
referred   as  a  turning-point    in   Venetian   development,   was 
composed  in  large  part  of  knights  from  northwestern  Europe, 
and  the  relations  established  then  with  Flanders,  Champagne, 
and  neighboring  districts,  were  continued  by  trade.     The  first 
reference  to  Venice  discovered  in  English  documents  is  dated 


COMMERCE  OF  SOUTHERN  EUROPE  97 

1201,  but  before  the  close  of  the  thirteenth  century  a  brisk 
commerce  with  England  had  grown  up;  at  one  time  in  the 
reign  of  Edward  I  over  2,000  sacks  of  wool  were  found  in  the 
possession  of  Italian  trading  companies.  The  trade  followed 
at  first  the  land  route  across  France,  but  soon  took  to  the  sea, 
and  though  the  land  traffic  was  never  wholly  abandoned  it 
became  less  important  and  was  discouraged  by  special  dues.  . 
109.  Regulation  of  this  commerce ;  the  Flanders  galleys.  — 
Soon  after  1300  the  government  took  charge  of  this  trade  and 
regulated  it  on  principles  which  were  followed  for  the  two 
hundred  years  during  which  it  remained  important.  Separate 
voyages  were,  as  a  rule,  prevented,  and  Venetian  merchants 
who  wished  to  participate  in  the  trade  must  join  in  the  fleet 
of  "Flanders  galleys"  which  sailed  at  intervals  (usually  once 
a  year),  as  the  opportunity  for  trade  seemed  favorable.  On 
these  occasions  the  Venetian  senate  voted  a  certain  number 
of  galleys  for  the  voyage,  and  auctioned  off  the  right  to  freight 
them.  Each  galley  was  propelled  by  180  oarsmen,  and  carried 
for  its  protection  a  force  of  archers  commanded  by  four  young 
patricians  who  were  sent  out  that  in  this  way  they  might  see 
the  world  and  learn  to  serve  their  native  city.  The  cargo  was 
carried  on  the  account  of  private  merchants,  but  the  supreme 
control  of  the  fleet  was  vested  in  a  captain  appointed  by  the 
Venetian  government,  and  bound  to  follow  its  instructions. 
The  voyage  to  Flanders  and  back  occupied  the  greater  part  of 
a  year,  as  the  galleys  touched  and  traded  at  many  ports  along 
the  way.  The  route  generally  taken  included  the  following 
stopping-places:  Capo  d'Istria  (Pola),  Corfu,  Otranto,  Syracuse, 
Messina,  Naples,  Majorca,  the  principal  ports  of  Spain  and 
Morocco,  and  Lisbon.  In  the  English  Channel  the  fleet  divided, 
some  galleys  going  to  Southampton  or  London,  others  to 
Sluys  (the  port  of  Bruges,  connected  with  it  by  a  short  canal), 
Middelburg,  and  Antwerp.  The  chief  objective  was  the  city 
of  Bruges,  the  great  market  where  the  trade  of  northern  Europe, 
in  the  hands  of  the  Hanseatic  merchants,  and  the  trade  of 
southern  Europe  in  the  hands  of  the  Venetians,  came  together. 


98  A  HISTORY  OF  COMMERCE 

110.  Development  of  other  cities  in  Italy;  freedom  and 
vigor   of   their  policy.  —  Space   forbids   the   consideration   in 
detail  of  the  history  and  policy  of  other  Italian  cities,  of  which 
some  rose  to  the  first  rank  in  commerce,  though  none  attained 
to  the  greatness  of  Venice.     The  lack  of  a  central  government 
in  the  peninsula  enabled  each  city  to  frame  its  policy  solely 
with  an  eye  to  its  own  interests.     The  Italian  cities  were  able  to 
free  themselves  from  the  laws  and  customs  that  had  been  neces- 
sary in  an  earlier  time,  but  which  lay  like  fetters  on  developing 
trade  and  industry.     The  city  of  Florence,  for  instance,  showed 
a  liberality  in  its  policy  regarding  land  tenure,  industry,  domes- 
tic and  foreign  commerce,  which  was  strikingly  modern.     The 
result  was  an  extraordinarily  rapid  development  in  commerce, 
manufacture  and   finance,  but  also,  unfortunately,   a   jealous 
rivalry  between  the  cities,  which  expressed  itself  not  only  in 
commercial  competition  but  also  in  destructive  wars. 

111.  Genoa.  —  Genoa,  situated  in  a  position  corresponding 
to  that  of  Venice  on  the  other  side  of  the  Italian  peninsula, 
grew  great  like  her  in  the  course  of  the  crusades.     In  conflict 
with  Pisa,  which  had  become  a  threatening  commercial  rival, 
Genoa  was  a  complete  victor  by  the  naval  victory  of  Maloria 
in  1284.     Against  Venice  the  city  was  not  so  fortunate.     Genoa 
recovered  in  part  from  the  blow  dealt  her  by  Venice  in  the 
fourth  crusade,  when  the  Greek  empire  was  re-established  at 
Constantinope  (1261),  and  won  some  important  naval  victories 
in  the  constant  succession  of  wars  culminating  in  the  battle 
of  Chioggia  in  1380.     The  Genoese  managed  always  to  secure 
a  share  of  the  Oriental  trade;  they  helped  to  establish  the 
system   of   joint    stock    companies;   and    contributed   to   the 
development   of  banking  and   public   finance.     They  lacked, 
however,  the  advantages  of  the  Venetian  situation,  both  as 
regarded  their  opportunity  for  trade  and  their  capacity  for 
defence.     They  were  drawn  into  the  net  of  continental  politics, 
and  as  at  home  they  had  never  shown  the  ability  of  the  Vene- 
tians to  pacify  or  to  crush  rival  factions,  their  force  was  wasted 
in  useless  political  conflicts. 


COMMERCE  OF  SOUTHERN  EUROPE  99 

112.  Inland  cities;  Florence.  —  Besides  the  two  great  sea- 
ports of  Venice  and  Genoa  other  cities  of  northern  Italy  grew 
rich  by  industry  and  commerce  at  this  period,  notably  Milan. 
The  chief  commercial  city  in  the  interior,  however,  was  Florence 
in  central  Italy.     Though  Florence  had  no  seaport  of  its  own 
until  after  1400,  when  it  overpowered  Pisa  and  Leghorn,  it 
carried  on  an  extensive  commerce  in  its  chief  product,  wool 
and  silk  textiles.     Great  trading  houses  bought  up  the  raw 
material  through  agents  settled  in  markets  like  Bruges,  or 
traveling  for  years  at  a  time,  and  sold  the  finished  product 
through  a  similar  network  of  agencies.     The  amount  of  manu- 
facturing and  commerce  in  the  city  stimulated  the  development 
of  banking  institutions,  and  Florentine  bankers  gained  not  only 
a  regal  position  at  home,  but  also  a  commanding  voice  in 
international  politics. 

113.  Other  Mediterranean  cities;  Marseilles,  Barcelona.— 
On  the  Mediterranean  coast  of  France  the  only  great  port  at 
this  period  was  Marseilles,  which  had  developed  rapidly  in  the 
course  of  the  crusades.     It  exported  to  Italy  and  the  East 
French  textiles  (woolen  and  linen),  wood,  metals,  wine,  oil, 
soap,  etc. 

In  Spain  the  Arabs  had  developed  the  arts  of  civilization  to 
a  point  which  was  far  above  that  of  the  contemporary  Christian 
states.  Toward  the  close  of  the  Middle  Ages,  however,  the 
contest  between  them  and  the  Christian  kings  for  the  su- 
premacy of  the  peninsula  absorbed  the  best  energies  of  both 
parties,  and  caused  an  actual  decline  in  material  civilization. 
One  city,  however,  Barcelona,  carried  on  a  very  extensive 
commerce,  and  was  one  of  the  most  important  ports  of  the 
Mediterranean.  Its  inhabitants  enjoyed  unusual  freedom 
under  the  kings  of  Aragon  and  were  reputed  to  be  among  the 
best  sailors  of  their  time;  they  had  trading  stations  along  the 
coast  of  the  Mediterranean  as  far  as  Egypt  and  Syria,  and  as 
merchants  or  pirates  frequented  the  Grecian  archipelago. 


100  A   HISTORY  OF  COMMERCE 


QUESTIONS  AND  TOPICS 

1.  Study :  (a)  the  position  of  Venice  in  the  Mediterranean ;  (6)  the 
peculiarities  of  the  site  of  the  city;  and  write  a  report  on  the  influence 
of  these  factors  on  the  history  of  Venice  in  its  different  periods.  [En- 
cyclopedia.] 

2.  Compare  the  policy  pursued  by  Venice  toward  Amalfi  in  Con- 
stantinople to  the  early  policy  of  the  Standard  Oil  Company.     [See  the 
account  of  railroad  rebates  in  accounts  of  the  Standard  Oil  Company  by 
Lloyd  or  Tarbell.] 

3.  Compare  the  Venetian  and  the  Athenian  sea-empires  in  respect  to 
(a)  extent,  (b)  duration,  (c)  policy.     [See  chapter  2,  and  for  further  in- 
formation on  Venetian  history  see  Brown.] 

4.  Make  a  map  showing  Venetian  trade  relations  in  the   fifteenth 
century.     [Falkner,  Statistical  Documents,  V.] 

5.  Summarize  the  account  of  commercial  transactions  at  that  period. 
[Same.] 

6.  Write  a  report  on  the  contributions  of  the  Italians  to  book-keeping. 
[Cf.  Beckmann,  Hist,  of  inventions,  Bohn's  Library,  vol.  1,  pp.  1-5.] 

7.  Write  a  similar  report  on  their  contributions  to  banking.    [Encyc., 
Palgrave's  Diet.,  or  some  history  of  banking.] 

8.  Write  out  the  English  equivalents  of  the  Italian  words  in  sect.  103. 

9.  What  resemblance  can  you  find  between  Venetian  policy  toward 
Germans,  and  Boer  policy  toward  English  in  the  South  African  Republic? 
[See  one  of  the  many  accounts  of  conditions  preceding  the  war  in  South 
Africa.] 

10.  From  the  description  in  sect.  109  draw  on  an  outline  map   the 
route  of  the  Flanders  galleys. 

11.  Write  a  report  on  the  political  conditions  in  Italy  in  the  last 
centuries  of  the  Middle  Ages.     [Current  manuals  of  European  history; 
Burckhardt,  Civilisation  of  the  Renaissance,  London,  1878.] 

12.  Write  a  report  on  the  rivalry  of  Venice  and  Genoa.     [Brown, 
Venice.] 

13.  Write  a  report  on  the  chief  periods  in  the  history  of  Genoa. 
[Encyclopedia.] 

14.  Study  the  history  of  the  Medici  family  as  showing  the  character 
of  commercial  and  political    life   in    Florence.     [Encyclopedia;   various 
biographies.] 

15.  Write  a  brief  report  on  the  commercial  history  of  Marseilles  or  of 
Barcelona.    [Encyclopedia.] 


COMMERCE  OF  SOUTHERN  EUROPE  101 


BIBLIOGRAPHY 

A  bibliography  of  the  history  of  Venice  is  given  by  Brown,  pp.  xix- 
xxiii.  A  good  brief  survey  of  Venetian  history,  with  a  description  of  the 
modern  city  and  a  map,  will  be  found  in  the  Encyc.  Brit.  The  history 
in  the  Story  of  the  Nations  series  cannot  be  recommended.  The  best 
book  for  our  purposes  is  Horatio  F.  Brown,  *  Venice,  N.  Y.,  Putnam, 
1893.  The  history  of  other  Italian  cities  is  treated,  with  some  attention 
to  commerce,  in  Bella  Duffy,  The  Tuscan  republics  with  Genoa,  N.  Y., 
Putnam,  1893. 


CHAPTER  XII 
COMMERCE  OF  NORTHERN  EUROPE 

114.  Development   of   commerce   in   South  and   North.  — 
Medieval  commerce  reached  its  highest  development  on  oppo- 
site sides  of  the  continent  of  Europe,  in  the  Levant  trade  of 
the  South  and  in  the  trade  carried  on  by  the  Hanseatic  cities 
of  the   North.     Commerce  was,   of   course,    not   confined   to 
these  localities.     We  have  seen  already  how  German  merchants 
and  the  Flanders  galleys  united  the  North  and  South  of  Europe; 
and  every  one  of  the  present  European  countries  took  a  greater 
or  less  share  in  the  exchange  of  wares.     We  have  already  de- 
scribed, however,  the  general  character  of  commerce  in  the 
medieval  period,  and  must  refer  the  reader  to  that  description 
for  some  idea  of  the  commerce  of  countries  which  are  not 
treated  in  detail  in  this  sketch. 

115.  Conditions  and  wares  of  the  Baltic  trade.  —  The  wares 
of  the  northern  trade  present  a  contrast  to  those  which  fur- 
nished the  material  of  eastern  commerce.    In  the  first  place 
the  countries  of  central  Europe  found  in  Scandinavia  and  the 
Northeast,  which  formed  the  trading  ground,  peoples  who  were 
their  industrial  inferiors;  these  peoples  were  glad  to  receive 
manufactures  instead  of  supplying  them.     Secondly,  the  cost 
of  carriage  was  much  less  in  the  North  than  in  the  South,  not 
only  because  transportation  was  almost  entirely  by  sea  and 
over  a  shorter  route,  but  also  because  the  tolls  on  trade  were 
much  less  than   in  the  Asiatic   countries.     It  was   possible, 
therefore,  to  trade  in  bulky  articles  of  comparatively  small 
value. 

The  luxuries  which  formed  so  large  a  part  of  the  eastern 
exports    were   scarcely    represented    in   the    northern   trade. 

102 


COMMERCE  OF  NORTHERN  EUROPE  103 

Amber  can  be  put  in  this  class,  though  the  trade  in  it  was  of 
no  great  importance;  this  was  a  fossilized  resin  which  was 
found  on  the  coast  of  the  Baltic,  and  which  was  used  for  orna- 
ments. Wax  was  a  far  more  considerable  item  of  export, 
which  may,  perhaps,  be  regarded  as  a  luxury,  since  it  found 
its  chief  employment  in  the  form  of  candles  used  in  church 
services. 

116.  Exports  from  the   Baltic,   mainly  raw  materials.  — • 
Most  of  the  exports  from  northeastern  Europe  were  raw  ma- 
terials serving  the  simpler  needs  of  man.     Among  the  food- 
stuffs fish  took  the  first  place.     Until  the  fifteenth  century 
the  herring,  which  does  not  now  range  outside  the  waters  of 
the  North  Sea  and  the  open  ocean,  came  each  year  in  late 
summer  to  the  Swedish  and  German  coasts  of  the  Baltic;  and 
the  trade  in  dried  and  salted  fish,  especially  herring,  was  one 
of  the  chief  branches  of  northern  commerce.     The  whole  popu- 
lation of  western  Europe  was  at  this  time  Roman  Catholic, 
and  the  consumption  of  fish  was  of  course  stimulated  by  the 
rules  of  the  church.     Other  foodstuffs  exported  were  honey, 
butter,  and  salt  meat. 

The  Northeast  had  no  textiles  to  offer  to  the  rest  of  Europe, 
but  in  its  furs  it  had  a  substitute  for  them  which  was  most 
highly  prized.  The  furs  included  not  only  the  finer  varieties, 
the  use  of  which  was  restricted  to  the  upper  classes,  but  also 
common  grades  that  were  desired  as  much  for  their  warmth 
as  for  their  appearance.  Houses  were  so  poorly  heated  that 
comfort  was  impossible  without  thick  clothing.  We  can  under- 
stand, therefore,  the  complaint  of  a  German  bishop  who  said 
that  "we  strive  as  hard  to  come  into  the  possession  of  a  marten 
skin  as  if  it  were  everlasting  salvation." 

Oth,er  raw  materials  exported  were  skins  and  tallow  from 
animal  industry,  and  forestry  products  which  were  destined  to 
be  the  mainstay  of  the  Baltic  trade  in  later  times,  various  forms 
of  timber  and  the  group  of  products  known  later  as  "naval 
stores,"  including  pitch,  tar,  and  turpentine. 

117.  Exports  from  the  West  to  the  Baltic  countries.  —  In 


104  A  HISTORY  OF  COMMERCE 

return  for  its  imports  western  Europe  sent  to  Russia  and 
•Scandinavia  its  manufactures  and  the  raw  products  which 
•could  not  be  obtained  in  the  Northeast.  The  list  includes 
wheat,  wine,  salt,  and  metals,  and,  among  the  manufactures, 
•especially  cloth  and  beer.  The  merchants  of  the  West  con- 
ducted the  trade  not  only  between  their  home  districts  and 
the  less  developed  countries,  but  also  between  these  countries; 
they  carried  herrings,  for  instance,  from  Scandinavia  to  Russia. 

118.  Contrast  of  the  history  of  the  commercial  cities  in 
Italy  and  in  Germany.  —  The  cities  of  Germany,  which  took 
.advantage  of  the  opportunities  for  trade  in  the  North,  were 
like  those  of  Italy  in  their  freedom  from  royal  authority. 
There  seems,  therefore,  a  chance  that  they  might  fight  among 
themselves  for  the  trade,  and  that  one  of  them  might  get  a 
•commanding  position  as  did  Venice  in  the  South.     No  one  of 
them,  however,  had  the  peculiar  advantages  of  the  geographical 
position  and  the  freedom  from  attacks  by  land  which  Venice 
enjoyed.     They  were  too  evenly  matched  to  settle  quickly  the 
question  of  supremacy,  and  they  ran  such  dangers  from  the 
attacks  of  feudal  lords  that  they  could  not  afford  to  quarrel 
among  themselves.     Instead  of  competing  they  united,  in  the 
Hansa  or  Hanseatic  League,  which  was  the  most  remarkable 
commercial  association  of  the  medieval  period. 

119.  Rise  of  the  Hanseatic  League.  —  The  word  "hanse" 
meant  in  early  German  a  society,  a  band  of  men,  and  was 
applied  to  a  number  of  commercial  associations  besides  the 
particular  league  to  which  we  apply  it  here.     This  league  grew 
^p  gradually  in  the  thirteenth  and  fourteenth  centuries.     The 
merchants  of  various  German  cities  found  it  necessary  to  unite 
for  the  protection  of  their  interests  abroad,  and  the  beginnings 
•of  the  association  are  found  in  the  island  of  Gotland,  in  the 
Baltic  and  in  the  city  of  London,  where  Germans  carried  on  a 
considerable  trade.     After  a  while  the  cities  at  home  took  up 
the  association  which  their  merchants  had  started  in  foreign 
countries,  and  in  the  fourteenth  century  a  great  league  grew 
up,  centering  in  the  cities  at  the  southwestern  corner  of  the 


COMMERCE  OF  NORTHERN  EUROPE  105 

Baltic,  of  which  Liibeck  was  the  chief.  Sailors  were  still 
afraid  to  navigate  the  waters  around  Denmark,  because  of  the 
dangerous  currents  and  shoals,  so  Baltic  wares  were  carried 
across  the  isthmus,  and  cities  like  Liibeck  grew  great  on 
this  trade  and  on  that  which  came  down  the  Elbe  valley. 

120.  Extent  and  organization  of  the  League.  —  "  When  the 
ambassadors   of  the  Hanseatic   League  in   England   in   1376 
were  asked  for  a  list  of  the  members  who  made  up  their  vast 
association,  they  answered  scornfully  that  surely  even  they 
themselves  could  not  be  supposed  to  remember  the  countless 
names  of  towns,  big  and  little  in  all  kingdoms,  in  whose  name 
they  spoke."     The  league  was  in  fact  very  extensive,  for  it 
included  not  only  the  chief  German  seaports,  but  also  towns  in 
the  interior  and  some  towns  outside  of  Germany  altogether. 
The  number  varied  from  time  to  time;  in  the  period  of  greatest 
power  it  was  nearly  100,  stretching  from  Dinant  in  modern 
Belgium  to  Krakau  and  Reval  in  the  East,  and  including 
towns  as  far  inland  as  Gottingen  in  Germany.     The  towns 
never  formed  a  very  close  union,  but  sent  their  representatives 
every  year  or  so  to  a  meeting-place  where  they  could  discuss 
matters  of  common  interest,  decide  upon  the  policy  to  be 
followed,  and  raise  what  resources  they  could  for  carrying  the 
policy  through. 

121.  Control  of  the  commerce  of  northern  Europe  by  the 
League.  —  The  aim  in  general  was  the  protection  of  commerce 
from  the  attacks  of  pirates  and  feudal  lords  and  the  negotiation 
of  commercial  treaties  which  would  extend  the  privileges  of 
members  and  preserve  their  monopoly  of  trade.     The  League 
was  so  successful  that  it  obtained  in  the  closing  centuries  of 
the  Middle  Ages  a  predominance  in  the  commerce  of  northern 
Europe  comparable  to  that  of  the  Dutch  and  of  the  English 
in  later  times.     In  the  West  it  had  to  share  its  trade  with 
other  peoples.     In  this  direction  Bruges  was  the  terminus  of 
many  of  the  voyages;  at  that  port  the  Hanseatics  met  the 
Venetians,  coming  in  the  Flanders  galleys,  and  secured  also 
many  wares  from  western  Europe.     This  was  by  no  means. 


COMMERCE  OF  NORTHERN  EUROPE  107 

however,  the  limit  of  their  western  voyages.  They  had  an 
important  trading  station  in  England,  with  a  great  group  of 
buildings,  the  "Steelyard"  near  London  bridge,  and  invested 
their  capital  in  English  tin  mines;  one  of  their  favorite  voyages 
was  to  Bourgneuf,  south  of  the  Loire,  on  the  western  coast  of 
France;  and  they  sent  their  ships  in  some  periods  as  far  as 
Spain  and  Portugal. 

The  North  and  East  of  Europe  were,  however,  the  field  of 
their  greatest  success.  In  Scandinavia  (including  Iceland)  and 
Russia,  they  gained  a  complete  monopoly  of  commerce;  the 
peoples  of  those  countries  were  so  backward  that  they  per- 
mitted the  Germans  to  do  the  most  important  part  of  their 
trading  for  them,  and  the  governments  were  weak  and  were 
easily  forced  to  grant  the  privileges  desired. 

122.  Methods  of  trading;  factories.  —  The  methods  which 
the  Hanseatics  employed  in  their  trade  are  worthy  of  special 
attention,  because  they  were  characteristic  of  the  time,  being 
very  similar  to  those  of  the  Venetians  in  the  East,  and  because 
they  have  been  employed  under  similar  conditions  in  later 
periods.  They  established  "factories"  in  the  sense  of  trading 
posts  (not  manufactories),  where  most  of  the  trade  was  carried 
on.  A  factory  was,  in  the  first  place,  a  fortress  where  the 
merchants  could  be  safe  from  attacks  by  the  natives;  at 
Novgorod,  for  instance,  the  group  of  buildings  was  enclosed 
and  was  carefully  guarded  by  men  and  by  great  watch-dogs 
both  day  and  night.  The  factory  was,  moreover,  a  place 
where  the  trade  could  be  regulated,  and  where  the  merchants 
could  be  kept  under  supervision.  To  let  a  man  trade  as  he 
pleased  would  have  subjected  not  only  himself  but  all  his 
compatriots  to  danger,  for  the  natives  made  little  distinction 
between  foreigners  and  would  readily  have  punished  one  mer- 
chant for  the  fault  of  another.  The  factories  were  centers  of 
social  life,  with  their  rough  initiations  and  their  games,  and 
they  were  useful  in  training  young  men  in  commerce;  but  they 
were  kept  under  such  strict  discipline  and  minute  regulation 
that  they  seem  like  garrisons  in  the  enemy's  country. 


A  HISTORY  OF  COMMERCE 


The  map  follows  a  contemporary  description  of  the  wares  which  were  brought  for 
sale  to  Bruges  and  Flanders,  omitting  some  of  the  less  important  and  those  dif- 
ficult to  identify.  Of  the  countries  left  blank  on  the  map,  Italy  excelled  in 
manufactures  (textiles  and  glass),  and  France  had  a  notable  export  trade  in  wine. 

123.  Flanders  and  Bruges.  —  Between  the  regions  under 
the  commercial  control  of  the  Hanseatics  on  one  side  and  the 
Venetians  on  the  other  lay  a  sort  of  neutral  zone  where  both 
parties  met,  centering  in  the  region  about  modern  Belgium. 
This  district  was  favored  not  only  by  the  junction  in  it  of  the 


COMMERCE  OF'  NORTHERN  EUROPE  109> 

northern  and  southern  trade;  it  had  other  advantages  of  posi- 
tion in  that  it  lay  near  the  mouths  of  great  rivers,  the  Scheldt, 
Meuse,  and  Rhine,  and  was  also  at  the  crossing  of  important, 
land  routes.  It  had  enjoyed  an  early  development  of  industry 
in  its  towns,  and  had  been  liberally  treated  by  its  feudal  rulers. 
At  different  periods  the  great  commerce  which  flowed  to- 
and  through  this  district  chose  different  points  for  its  concen- 
tration. In  the  fourteenth  century  the  favored  spot  was 
Bruges  (the  Flemish  word  meaning  bridges),  the  greatest 
market  in  northern  Europe,  vying  even  with  Venice.  Here 
could  be  found  Scandinavians,  Germans,  English,  French, 
Portuguese,  Spaniards,  and  Italians,  exchanging  the  wares 
from  different  sources;  a  contemporary  writer  names  30  differ- 
ent countries,  both  Christian  and  Mohammedan,  which  fed 
the  market  of  Bruges  with  their  commodities.  The  natives 
were  content  to  let  foreigners  carry  on  the  business  of  trans- 
portation; they  stayed  at  home  and  grew  rich  from  the  wares, 
money  and  credit  instruments  which  commerce  brought  to 
their  doors. 

124.  Decline  of  Bruges  in  the  fifteenth  century;  rise  of 
Antwerp.  —  Partly  because  of  this  passive  part  which  they 
assumed,  partly  because  of  the  practice  of  medieval  countries 
in  diverting  their  trade  from  one  place  to  another,  the  people 
of  Bruges  had  but  a  precarious  hold  on  their  commerce,  and 
lost  it  in  the  fifteenth  century.     The  silting  up  of  its  harbors, 
making  these  unfit  to  hold  the  larger  ships  now  coming  into- 
use,  explains  in  part  the  decline  of  Bruges,  but  political  forces 
were  at  work  also  to  divert  commerce  to  another  center.     In 
the  fifteenth  century  the  place  of  Bruges  as  the  great  market 
of  northern  Europe  was  taken  by  Antwerp,  which  had  fought 
its  way  up  against  all  rivals,  and  which  held  the  leadership 
now  for  one  hundred  years. 

125.  Conditions  of  commerce  in  England.  —  England  lay 
on  the  outside  of  the  great  currents  of  medieval  commerce. 
It  had  an  advantage  which  it  had  enjoyed  since  pre-Roman 
times,  the  practical  monopoly  of  tin  production  in  Europe; 


110  A  HISTORY  OF  COMMERCE 

and  added  to  this  in  the  latter  part  of  the  Middle  Ages  a  still 
more  important  monopoly,  that  of  wool  production.  Sheep 
were  raised,  of  course,  in  other  parts  of  Europe,  and  the  merinos 
of  Spain  yielded  a  finer  grade  of  wool  than  could  be  produced 
in  England.  For  some  reason,  however,  the  sheep  industry 
did  not  prosper  elsewhere  as  it  did  in  England.  Possibly  the 
constant  wars  and  raids  which  disturbed  the  feudal  states  of 
the  continent  may  have  prevented  the  production  of  a  com- 
modity which  could  be  so  easily  destroyed  or  carried  off  as 
booty.  At  any  rate,  the  more  settled  political  conditions  in 
England,  where  internal  war  became  soon  a  rare  exception, 
favored  the  development  of  all  the  national  resources.  Aided 
by  the  prevalence  of  peace  at  home,  and  by  the  disappearance 
of  feudal  tolls  on  trade,  the  English  advanced  rapidly  in  the 
fourteenth  and  fifteenth  centuries  and  instead  of  exporting 
the  raw  wool  began  to  make  it  into  cloth  and  to  export  the 
finished  product.  Trade  was  furthered  also  by  the  continental 
conquests  of  English  kings,  which  brought  England  and  the 
South  of  France  into  close  relationship,  and  built  up  a  large 
import  trade  in  French  wines. 

126.  English  trade  passive  until  the  close  of  the  Middle 
Ages.  —  Most  of  the  trade  in  English  wares,  however,  was  in 
the  hands  of  foreigners  until  the  very  close  of  the  Middle 
Ages.  The  English  kings  showed  more  interest  in  the  develop- 
ment of  their  resources  by  the  encouragement  of  alien  mer- 
chants than  they  showed  in  the  extension  of  commerce  carried 
on  by  natives.  Hanseatics  and  Venetians  fetched  and  carried 
the  wares  of  distant  countries  for  the  English;  and  the  "Mer- 
chants of  the  Staple,"  a  society  composed  largely  of  aliens, 
enjoyed  a  legal  monopoly  of  the  export  of  the  most  important 
raw  materials  which  England  supplied  to  European  commerce 
—  wool  and  sheepskins,  leather,  tin,  and  lead. 

English  merchants  became  restive  in  the  inferior  position 
assigned  to  them  both  at  home  and  abroad,  and  before  the 
end  of  the  Middle  Ages  began  to  fight  for  equal  rights  or  for 
privileges,  but  they  did  not  secure  final  and  complete  victory 


COMMERCE  OF  NORTHERN  EUROPE  111 

until  the  beginning  of  the  modern  period,  in  the  sixteenth 
century. 

QUESTIONS  AND  TOPICS 

1.  Pursue  on  sects.  114-117  studies  similar  to  those  suggested  above 
(sects.  88-94)  for  the  Levant  wares.    For  the  character  of  the  Baltic  trade 
at  present  consult  the  Statesman's  Year-Book,  index,  Norway  or  Sweden, 
The  history  of  the  trade  in  amber  may  be  made  an  interesting  study,  as 
the  article  has  been  an  object  of  commerce  since  prehistoric  times. 

2.  Origin  of  the  Hanseatic  League.     [Zimmern,  pp.  11-29.] 

3.  What  place  does  Liibeck  hold  in  the  commerce  of  modern  Ger- 
many?   [Statesman's  Year-Book,  Germany,  last  table  in  section  on  com- 
merce.] 

4.  What  effect  may  the  Elbe-Trave  Canal,  opened    June    16,  1900, 
have  upon  the  future  of  the  city?     [See  U.  S.  Consular  reports  and  news- 
papers about  that  date.] 

5.  Contrast  the   organization  of  the  Hanseatic  League  and  of  the 
Venetian  empire. 

6.  Report  in  detail  on  the  organization  of  the  League,  and  its  weak- 
nesses.    [Zimmern,  202-220.] 

7.  Write  an  essay  on  the  life  in  a  Hanseatic  factory.     [Zimmern, 
137-147,  Bergen;  179-201,  London.] 

8.  Compare   the   Hanseatic   factory  with   an   Indian   trading  post. 
[Descriptions  of  such  posts  can  be  found  in  histories  of  the  Hudson's  Bay 
Company.] 

9.  Write  a  report  on  the  rise  and  fall  of  Bruges  or  of  Antwerp  as  a 
commercial  center.     [Encyclopedia.] 

10.  Write  a  report  on  one  of  the  following  topics  in  English  medieval 
commerce : 

(a)  Exports. 
(6)  Imports. 

(c)  Shipping. 

(d)  Attitude  of  the  king. 

(e)  Institution  of  the  Staple. 

[Sufficient  material  on  all  these  points  may  be  found  in  Cunningham, 
Growth,  and  if  the  student  is  able  to  use  a  book  like  that  he  will  get  far 
more  benefit  than  in  abstracting  the  summaries  (often  inaccurate  or  mis- 
leading) in  the  smaller  manuals.] 


112  A  HISTORY  OF  COMMERCE 


BIBLIOGRAPHY 

For  general  bibliography  consult  Gross,  Sources,  and  Palgrave's 
Dictionary. 

General  accounts  will  be  found  in  En  eye.  Brit.,  article  Hanseatio 
League,  and  in  Zimmern,  **  Hansa  Towns,  a  book  which  can  be  strongly 
recommended.  It  includes  a  map  and  illustrations,  but  has  no  bibliog- 
raphy. 

For  descriptions  of  English  commerce  in  this  period  see  Cunningham, 
**  Growth,  or  the  articles  in  Traill's  Social  England.  Briefer  accounts 
are,  of  course,  to  be  sought  in  manuals  already  mentioned. 


CHAPTER  XIII 

DEVELOPMENT  OF  THE  MEDIEVAL  ORGANIZATION  OF 
COMMERCE 

127.  Types    of    medieval    traders ;    pedler,    shopkeeper.  — 

Enough  has  already  been  said  to  guard  the  reader  against  the 
idea  that  great  wholesale  merchants  of  the  modern  type  were 
common  in  the  Middle  Ages.  The  regular  type  of  trader  was 
the  artisan  who  manufactured  the  goods  he  sold,  or  the  pedler 
who  collected  a  stock  of  goods  in  a  town  and  carried  them 
about  in  a  pack  for  sale.  The  pedler's  stock  was  not  unlike 
that  which  he  would  carry  around  the  country  nowadays,  — 
sewing  materials,  toilet  articles,  *  etc.  An  illumination  in  a 
manuscript  of  the  fourteenth  century,  representing  monkeys 
opening  a  pedler's  box,  shows  vests,  caps,  gloves,  musical 
instruments,  purses,  girdles,  hats,  cutlasses,  pewter  pots,  and 
other  articles.  An  English  statute  of  the  fourteenth  century, 
describing  a  similar  stock  in  trade,  mentions  rabbit  skins  as 
one  of  the  articles  which  the  pedlers  took  in  exchange  for 
their  wares,  and  an  English  author  of  the  period  accuses  them 
of  catching  cats  for  their  skins.  The  petty  shopkeeper  stood 
a  step  above  the  pedler.  He  had  a  regular  shop  in  a  town, 
where  he  displayed  his  wares,  and  often  went  on  trips  to  the 
markets  of  other  towrns,  where  he  set  up  a  booth  and  carried 
on  such  trade  as  the  town  regulations  allowed. 

128.  Merchants.  —  Still    another    step    above    the    shop- 
keeper was  the  real  merchant,  who  had  his  warehouse,  from 
which  he  supplied    the  retail    traders,  and  who   bought  up 
considerable  quantities  of  goods  at  the  great  fairs  at  home 
and  abroad.     It  is  doubtful  whether  we  can  find  in  this  class 
in  northern  Europe  any  men  who  devoted  themselves  entirely 

113 


114 


A   HISTORY  OF  COMMERCE 


V 

TRADE  RELATIONS  OF 


A  GERMAN  MERCHANT 

About  14OO 

.SCALE  OF   MILE8 


See  section  128  for  a  description  of  the  trade  of  this  merchant.  The  map  shows  only 
his  German  business,  and  indicates  roughly,  by  the  size  of  the  circle,  the  importance 
of  each  town  in  his  commercial  dealings.  Note  how  trade  tended  to  the  water  routes. 


MEDIEVAL  ORGANIZATION  OF  COMMERCE  115 

to  wholesale  trade;  and  merchants  had  not  yet  specialized  so 
that  each  would  devote  himself  exclusively  to  the  trade  in  a 
particular  ware.  We  can  illustrate  the  point  by  a  German 
merchant,  whose  account  books  have  been  preserved  so  that 
it  is  possible  to  follow  his  business  operations  exactly.  Vicko 
von  Geldersen  was  a  draper  of  Hamburg,  where  he  rose 
to  wealth  and  a  high  position.  He  imported  cloth  wholesale, 
and  sold  it  both  wholesale  and  retail.  But  he  made  use 
of  his  connection  with  Bruges,  which  was  the  great  cloth 
market,  to  send  there  for  sale  iron,  honey,  meat,  butter,  etc., 
and  to  import  such  wares  as  oil,  spices,  figs,  and  almonds, 
which  he  sold  to  smaller  dealers  in  many  cities  of  Germany. 

Members  of  the  class  to  which  Vicko  belonged  were  the 
leaders  of  commerce  in  the  North  of  Europe  during  the  Middle 
Ages;  they  accumulated  wealth  which  seemed  great  at  the 
time,  and  formed  an  aristocratic  class  in  social  and  political 
life.  Their  sons  were  brought  up  to  follow  the  family  business, 
and  often  trained  to  it  by  extensive  study  and  residence  in 
foreign  countries. 

129.  Development  of  commercial  association  in  the  Middle 
Ages.  —  In  the  Middle  Ages  we  find  the  beginnings  of  that 
process  of  association  which  can  be  traced  step  by  step  to 
the  formation  of  the  great  "trusts"  of  the  present  day,  and 
which  forms  one  of  the  most  important  features  in  the  develop- 
ment of  commerce.  To  point  out  the  various  advantages 
which  arise  from  the  association  of  laborers  and  of  capitalists 
would  lead  us  into  political  economy;  and  to  describe  in  detail 
the  development  of  the  various  forms  of  association  would 
require  an  excursion  into  legal  history  equally  out  of  place. 
We  must  content  ourselves  with  indicating  some  of  the  main 
features,  which  are  easily  intelligible. 

The  need  of  association  was  felt  especially  in  the  Middle 
Ages  because  it  was  necessary  that  a  merchant  or  his  repre- 
sentative should  accompany  his  wares  on  the  road.  It  was 
often  difficult  for  a  merchant  to  look  after  a  commercial  venture 
'in  person;  he  could  not  trust  it  to  a  hireling;  and  the  slight 


116  A  HISTORY  OF  COMMERCE 

development  of  the  carrying  and  commission  profession  made 
it  impossible  for  him  to  leave  it  to  a  class  of  persons  who 
nowadays  make  it  their  business  to  attend  to  such  matters. 
The  merchant,  therefore,  would  associate  with  him  some  one 
who  could  represent  his  interests;  and  a  modern  author  asserts 
that  in  comparison  with  the  amount  of  business  many  more 
commercial  companies  were  formed  then  than  at  present.  The 
merchant  would  choose  by  preference  a  member  of  his  family, 
and  family  partnerships  were  the  prevailing  form  of  association 
at  first.  With  the  growth  of  commerce,  however,  greater 
freedom  of  association  was  demanded,  and  the  group  ceased 
to  be  limited  by  considerations  of  relationship. 

130.  Advantages  of  association.  —  By  joining  together,  two 
or  more  men  could  follow  different  lines;  one  would  stay  at 
home  while  another  could  accompany  the  wares,  and  perhaps 
still  another  could  attend  to  sales  in  a  distant  city.     The 
advantages  of  this  are  apparent,  and  of  not  less  importance 
are  the  benefits  arising  from  the  better  utilization  of  capital. 
A  person  who  had  accumulated  wealth,  but  who  on  account 
of  advanced  age,   physical  disability,   or  other  circumstance 
could  not  himself  employ  it  in  commerce,  would  join  with  him 
a  man  who  contributed  to  the  enterprise  the  necessary  business 
activity. 

Capitalists  gained  also  in  another  way,  for  they  were  enabled 
by  association  to  share  the  risks  of  an  enterprise.  A  man  who 
put  all  his  money  into  one  ship  or  cargo  ran  the  risk  of  being 
ruined;  and  foregoing  paragraphs  have  shown  that  the  dangers 
in  the  path  of  commerce  were  by  no  means  slight.  By  dis- 
tributing his  capital  in  a  number  of  enterprises,  however,  as 
could  easily  be  done  if  he  entered  into  association  with  others, 
he  could  hope  to  make  up  for  any  probable  loss  by  the  profits 
of  his  successful  ventures,  and  can  be  regarded  as  insuring 
himself.  We  find,  in  fact,  that  the  shipping  business  was  for 
the  most  part  carried  on  in  this  way. 

131.  Forms  of  association ;  partnership.  —  Commercial  asso- 
ciation took  ordinarily  the  form  of  a   "commenda"    (Latin 


MEDIEVAL  ORGANIZATION  OF  COMMERCE  117 

commendare,  entrust).  The  "commendator"  contributed  capi- 
tal in  the  form  of  money,  wares  or  a  ship,  while  the  other 
party,  called  the  "tractator"  contributed  only  his  personal 
services  to  the  enterprise;  of  the  profits  one  fourth  went  to 
the  tractator  and  the  remainder  to  the  commendator.  The 
tractator  who  saved  his  earnings  could  in  time  also  contribute 
capital,  and  was  given  a  greater  share  of  the  profits  and  more 
freedom  in  conducting  the  business. 

The  commenda,  corresponding  to  a  "silent  partnership," 
was  older  and  of  more  importance  in  commercial  undertakings 
than  the  ordinary  partnership  of  the  present  day;  but  the 
latter  form  of  association  grew  up  also  at  this  time,  and  was 
used  in  commerce  as  well  as  in  industry.  The  joint-stock 
corporation  belongs  in  its  important  applications  to  a  later 
period. 

132.  Spread  of  the  practice  of  association  from  Italy.  — 
The  different   forms   of   partnership  developed   especially   in 
Italy  in  the  last  few  centuries  of  the  Middle  Ages,  when  the 
growth  of  commerce  was  most  rapid,  and  they  became  ex- 
traordinarily extensive  and  important.    They  secured  the  union 
of  capital  and  executive  ability  which  enabled  far  greater  en- 
terprises to  be  carried  on  than  would  have  been  possible  without 
them.     The    Italian    commercial    house    of   the    Peruzzi,.  .foj 
instance,  had  fourteen  branches  and  one  hundred  and  fifty 
factors  or  agents.     Even  the  assistants  in  the  business,  who 
did  not  themselves  contribute  capital  to  it,  were  interested  in 
its  success  by  a  system  of  profit  sharing.     From  Italy  the 
practice  of  association  spread  to  the  North  of  Europe,  and  it 
became    practically    universal    in    commercial    undertakings. 
Each  of  the  larger  firms-  had  its  characteristic  trade-mark, 
distinguishing  its  bales  of  goods. 

133.  Position  of  the  Jews  in  medieval  commerce.  —  The 
Jews  held  a  peculiar  position  in  medieval  Europe.     They  were 
distrusted  and  disliked  by  the  Christians,   because  of  their 
difference  in  religion,'  and  because  of  their  business  ability, 
which  made  competition  with  them  a  difficult  matter.     Though 


118  A   HISTORY  OF  COMMERCE 

they  were  scattered  throughout  Europe  they  kept  touch  with 
each  other,  and  so  enjoyed  exceptional  advantages  in  the 
pursuit  of  commerce  and  the  extension  of  business  relations. 
In  the  early  part  of  the  Middle  Ages  they  were  indispensable; 
Christians  were  not  educated  up  to  their  level  in  business,  and 
had  to  leave  to  them  the  major  part  of  the  slight  commerce  of 
the  times.  As  Christian  peoples  developed,  however,  they 
demanded  for  themselves  the  place  which  the  Jews  had  won; 
and  by  a  long  series  of  restrictions  and  persecutions  they 
forced  the  Jews  into  some  particular  branches  of  business 
where  the  Christians  could  not  follow  them.  The  church 
taught  for  a  time  that  it  was  wrong  to  lend  money  at  interest, 
and  discouraged  Christians  from  seeking  gain  by  this  means. 
The  Jews,  therefore,  seized  the  opportunity  which  was  denied 
to  Christians,  and  became  money-lenders.  Their  position  was 
always  precarious,  for  the  law  gave  them  no  protection,  and 
they  were  subject  constantly  to  robbery  by  feudal  princes 
and  by  the  people,  who  believed  everything  evil  of  them. 
From  England  they  were  banished  altogether,  for  several  cen- 
turies. They  showed  astonishing  skill  and  fortitude,  but  in 
the  last  centuries  of  the  Middle  Ages  they  lost  their  position 
even  as  leaders  in  credit  operations.  The  church  then  per- 
mitted money-lending  if  the  terms  were  not  extortionate;  and 
Christians  from  southern  Europe,  "Caursines"  (named  from 
Cahors,  in  the  south  of  France)  and  "Lombards,"  succeeded 
the  Jews  as  the  money-lenders  of  Europe. 

134.  Character  of  currency  in  the  Middle  Ages.  —  One  of 
the  serious  obstacles  to  the  development  of  commerce  was  the 
character  of  the  currency  in  the  various  countries  of  Europe. 
Assuming  that  the  reader  appreciates  the  importance  of  money 
as  facilitating  the  operations  of  exchange,  and  knows  the 
qualities  of  good  money,  we  may  confine  ourselves  to  pointing 
out  some  of  the  characteristic  faults  of  medieval  currency. 

(1)  Merchants  could  not  rely  upon  the  government  to. 
maintain  the  standard  of  value.  In  many  countries  the  kings 
debased  the  coinage  again  and  again,  to  secure  the  means  of 


MEDIEVAL  ORGANIZATION  OF  COMMERCE  119 

carrying  on  war  or  paying  public  expenses  of  other  kinds. 
Every  debasement,  as  it  left  the  coins  with  less  pure  metal, 
lowered  their  purchasing  power  and  raised  prices;  many  inno- 
cent people  suffered  and  everybody  grew  reluctant  to  make 
bargains  and  contracts. 

(2)  In  many  countries,  especially  those  on  the  Continent, 
the  privileges  of  the  great  feudal  lords  included  the  right  to 
keep  a   mint   and   to   issue   coins.     The  central   government 
restricted  this  right,  as  it  grew  stronger,  but  in  general  the 
currency  of  medieval  Europe  was  made  up  of  a  vast  variety 
of  coins  of  standards  even  less  reliable  than  that  of  the  king  s 
coinage.     There  was  danger  that  a  coin,  even  if  it  was  of  good 
weight,  could  not  be  passed  at  its  full  value  outside  the  locality 
where  it  was  minted. 

(3)  Even  in  countries  like  England,  where  feudal  coinage 
was  put  down  and  where  debasement  by  the  government  was 
exceptional,  counterfeits  were  not  rare,  and  the  clipping  of 
coin  was  very  common. 

These  characteristics  of  medieval  currency  made  the  money- 
changer a  necessary  figure  in  the  commercial  world;  he  was  to 
be  found  everywhere,  even  in  the  small  towns,  buying  and 
selling  the  various  coins  in  circulation. 

136.  Difficulty  in  making  payments  in  distant  places.  — 
While  the  money-changer  facilitated  payments  in  any  given 
place,  he  was  not  of  much  assistance  to  a  merchant  desirous 
of  making  a  payment  in  a  distant  town  or  country.  The 
merchant,  it  is  true,  could  buy  from  him  foreign  money  with 
which  to  make  the  payment;  but  the  transportation  of  the 
actual  coin  was  not  only  dangerous  and  expensive,  but  also 
subject  to  legal  restriction,  and  was  to  be  avoided  if  possible. 
The  merchant  would  probably  prefer  to  send  instead  of  money 
some  ware,  which  he  could  sell  to  advantage  at  the  destination, 
and  then  with  the  proceeds  make  his  payment.  For  example, 
when  Michael  Behaim  of  the  Nuremberg  Company  wanted  to 
send  1,000  gulden  from  Breslau  to  Nuremberg,  he  found  it 
expedient  to  buy  an  amount  of  wax  which  he  could  sell  in 


120  A   HISTORY  OF  COMMERCE 

Nuremberg  for  the  required  sum,  and  he  shipped  that  instead 
of  money^. 

136.  Introduction  of  the  bill  of  exchange.  —  It  might  not, 
however,  always  be  convenient  for  a  man  to  meet  his  obliga- 
tions in  this  way;  he  might  not  have  the  commercial  knowledge, 
or  perhaps  he  might  have  no  good  opportunity  to  ship  a  ware. 
Behaim,  in  the  case  cited,  had  in  fact  resorted  to  the  wax 
shipment  only  from  necessity,  after  he  found  it  impossible  to 
make  his  payment  by  the  means  of  remittance  now  become 
general,  the  bill  of  exchange. 

Suppose  that  B.  in  Breslau  owed  the  1,000  gulden,  to 
A.  in  Nuremberg,  for  spice;  and  suppose  that  D.  in  Breslau 
was  the  creditor  of  another  Nuremberg  merchant  C,  to  the 
extent  of  1,000  gulden,  perhaps  for  furs.  It  would  be  absurd 
for  B  to  ship  the  money  or  to  go  out  of  his  way  to  ship  wax 
to  A,  and  for  C  to  ship  the  same  value  to  D,  when  the  pay- 
ments could  be  made  to  cancel  each  other.  Why  should  not 
B  pay  to  D  in  Breslau  the  1,000  guldens  due  him,  and  tell 
C  to  pay  the  same  amount  to  A  in  Nuremberg?  This  could 
be  accomplished  by  means  of  bills  of  exchange;  D  could  write 
out  an  order  to  C  directing  him  to  pay  the  money,  and  sell  it 
to  B,  who  would  thus  have  the  means  of  paying  his  debt  in 
Nuremberg  to  A. 

Such  an  operation  implies,  however,  not  only  regular  com- 
merce of  considerable  volume  but  also  mutual  confidence 
among  the  participants.  How  could  B  know  whether  D 
actually  had  a  correspondent  in  a  distant  place  who  would 
meet  his  obligations  promptly?  It  was  not,  in  fact,  until  the 
thirteenth  century  that  bills  of  exchange  were  used  to  any 
considerable  extent;  then  they  were  developed  in  Italy,  and 
spread  from  there. 

137.  Development  of  banking  in  Italy.  —  In  Italy,  also, 
the  money-changers  developed  other  forms  of  banking.     As 
they  were  dealers  in  money,  business  men  in  want  of  capital 
for  their  operations  naturally  sought  it  of  them.     The  money- 
changers might  lend  it  from  their  own  stock  or  act  as  brokers 


MEDIEVAL  ORGANIZATION  OF  COMMERCE  121 

and  secure  the  money  from  some  man  who  had  a  surplus. 
The  short  step  from  this  to  the  common  form  of  modern 
banking  was  made  when  merchants  deposited  their  surplus 
cash  with  the  money-changer,  and  he  had  thus  a  considerable 
stock,  which  he  could  lend  so  long  as  he  kept  sufficient  reserve 
to  meet  the  demands  of  depositors.  It  soon  became  unneces- 
sary for  money  to  pass  at  all  in  large  transactions;  a  man 
could  get  a  loan  from  a  bank  simply  by  having  a  deposit 
ascribed  to  him  on  the  books,  and  could  assign  this  loan  to 
others  as  he  chose  to  pay  it  out.  The  characteristic  danger 
of  banking,  the  attempt  to  make  a  great  deal  of  credit  out  of 
a  little  capital,  appears  early  in  Italy,  with  its  results  of  failures 
and  crises.  The  advantages  of  the  banking  system,  however, 
the  economizing  of  time  and  money  and  the  facilitating  of 
business  operations,  were  so  clear  that  banking  kept  its  place, 
and  spread  toward  the  close  of  the  Middle  Ages  from  Italy  to 
other  countries. 

QUESTIONS  AND  TOPICS 

There  is,  in  the  history  of  commerce,  no  topic  more  difficult  and  none 
more  important  than  the  development  of  the  organization.  The  student 
who  has  learned  the  facts  has  made  only  a  beginning;  he  must  grasp  the 
significance  of  the  facts  if  he  is  to  gain  anything  from  his  study.  The 
teacher  is  advised,  therefore,  to  enlarge  on  the  advantages  of  association 
and  cooperation,  as  they  are  treated,  from  one  point  of  view,  in  Adam 
Smith's  celebrated  discussion  of  the  division  of  labor,  and  in  many  manuals 
of  economics. 

So  much  depends  on  the  degree  of  advancement  of  the  pupil,  and  on 
his  particular  environment  in  country,  town  or  city,  that  it  is  difficult  to 
suggest  specific  questions  or  topics.  In  general,  the  teacher  should  sug- 
gest the  meaning  of  earlier  development  by  constant  reference  to  the 
present  organization.  Why  have  pedlers  disappeared  in  so  many  dis- 
tricts, where  do  they  still  remain,  and  why?  What  is  the  proportion  of 
retail  and  wholesale  merchants  in  your  city;  how  far  has  the  specializa- 
tion of  wholesale  trade  progressed?  Answers  may  perhaps  be  found  in  a 
business  directory.  The  student  who  is  competent  to  work  out  the  his- 
tory of  business  organization  in  his  own  town  will  not  fail  to  get  new 
light  on  the  history  of  earlier  development;  and  a  report  on  the  history 
of  some  particular  branch  of  trade  at  home  should  be  an  excellent  exer- 
cise to  be  worked  out.  Another  exercise  would  be  the  history  of  the 


122  A  HISTORY  OF  COMMERCE 

different  forms  of  association  (partnerships,  joint-stock  companies),  and 
a  study  of  the  reasons  lying  behind  the  rise  and  fall  of  a  particular  form. 
The  choice  of  questions  and  topics  here  must  be  left  to  the  ingenuity  and 
discretion  of  the  teacher. 

The  history  of  the  currency  in  England  [see  Cunningham]  is  an  easier 
topic. 

On  the  rise  of  credit  instruments  (bills  of  exchange,  banking),  the 
student  will  probably  be  best  prepared  if  he  is  given  reading,  either  in 
review  or  hi  anticipation,  in  some  general  manual  which  will  enable  him 
to  appreciate  the  importance  of  credit  institutions  now,  and  will  hence 
interest  him  in  their  origin.  [Cf .  Usher,  The  origin  of  the  bill  of  exchange, 
Journal  of  Pol.  Econ.,  Chicago,  June,  1914,  22:566-576.] 

An  exercise  which  should  be  profitable  and  rather  easy  is  a  report  by 
the  student  on  the  life  of  some  English  merchant.  [See  Fox  Bourne,  or 
consult  the  Dictionary  of  National  Biography  on  names  like  Richard 
Whittington,  William  Canynges,  William  de  la  Pole,  etc.  Further  bio- 
graphical material  is  provided  by  Alice  Law,  Some  notable  "King's 
Merchants,"  Economic  Review,  1902,  12:  309  ff.;  1903,  13:  411  ff.] 

If  Bourne's  Romance  of  trade  is  available  the  student  may  prepare 
an  abstract  of  chap.  1  (the  Jews)  or  chap.  4  (money  and  credit). 

BIBLIOGRAPHY 

The  student  will  find  bibliographies  of  some  of  the  topics  treated  in 
this  chapter  by  consulting  the  appropriate  articles  in  Palgrave's  Diction- 
ary. Most  of  the  best  literature  is  foreign.  The  best  references  in  Eng- 
lish are  to  **  Ashley  and  *  Cunningham. 

The  important  and  difficult  subject  of  the  development  of  capitalistic 
organization  is  treated  by  John  A.  Hobson,  *  Evolution  of  modern  capi- 
talism, new  ed.,  1916,  chap.  1,  W.  Sombart,  **  The  quintessence  of  capi- 
talism: a  study  of  the  history  and  psychology  of  the  modern  business 
man,  London,  1915,  and  by  Pirenne,  *  The  stages  in  the  social  history  of 
capitalism,  American  Hist.  Rev.,  Apr.  1914,  19:  494-515.  One  aspect 
of  the  subject  is  covered  by  Arthur  H.  Woolf,  Short  history  of  accountants 
and  accountancy,  London,  1912. 


CHAPTER  XIV 
COMMERCE  AND  POLITICS  IN  THE  LATER  MIDDLE  AGES 

138.  Development  of  the  modern  political  system  in  the 
later  Middle  Ages.  —  Toward  the  close  of  the  Middle  Ages  the 
feudal  system  of  government  gave  place  gradually  to  a  system 
more  like  that  which  the  Romans  had  established  and  with 
which  we  are  familiar  now.     As  trade  and  intercommunication 
increased,  and  towns  grew  up  holding  a  population  of  con- 
siderable wealth,  the  kings  found  it  possible  to  make  into  a 
reality  the  position  of  nominal  headship  which  tradition  and 
the  church  conferred  upon  them.     They  found  in  the  mer- 
cantile and  manufacturing  classes  people  who  could  afford  to 
pay  taxes,  and  who  were  willing  to  pay  large  sums  to  be 
relieved  from  the  oppressions  of  the  feudal  lords.     It  became 
possible  once  more  to  transport  supplies  and  to  send  troops 
to  distant  localities,  and  the  kings  devised  means  by  which 
they  could  keep  in  touch  with  their  officials,  and  hold  them 
to  loyal  service.     The  result  was  a  great  increase  in  the  power 
of  the  central  government,  at  the  expense  of  the  feudal  lords. 

139.  Variety  of  development  in  different  countries.  —  The 
development,  as  sketched  above,  was    very  different  in  the 
different  countries.     It  came  early  in  England,  and  local  lords 
lost  practically  all  of  their  independence.     In  France  it  was  a 
very  gradual  process,  extending  over  the  last  four  centuries 
of  the  Middle  Ages.     Even  in  the  sixteenth  century  and  later, 
the  kings,  though  they  seemed  to  enjoy  great  power,  did  not 
abolish  all  the  remnants  of  feudalism,  which  continued  down 
to  the  French  Revolution  in  1789,  to  the  great  harm  of  indus- 
trial  development.     In   Spain   the   union   of  the   crowns    of 
Castile  and  Aragon  just  before  1500  completed  the  process, 

123 


124  A   HISTORY  OF  COMMERCE 

by  establishing  nearly  absolute  royal  authority  over  the  greater 
part  of  the  peninsula.  In  Germany  and  Italy  the  result  was 
different.  The  same  man,  who  called  himself  the  Emperor  of 
the  Romans,  claimed  the  royal  power  in  both  countries,  but 
in  attempting  too  much  he  lost  everything.  He  wasted  the 
royal  resources  in  vain  attempt  to  establish  his  authority,  and 
became  a  mere  figure-head.  The  control  of  government  passed 
in  those  countries  to  local  authorities;  but  it  is  important  to 
note  that  these  included  not  only  feudal  lords,  but  also  cities 
which  had  become  strong  enough  to  throw  off  feudal  authority 
and  to  establish  for  themselves  almost  complete  independence. 

140.  Effect  on  commerce  of  a  strong  and  of  a  weak  central 
government.  —  In  a  country  in  which  the  cities  established 
complete  independence  they  seemed  for  a  time  to  have  gained 
by  throwing  off  the  royal  power.  Each  city  could  control  its 
affairs  and  shape  its  policy  to  suit  local  interests;  and  the 
great  cities  of  Italy  and  Germany  before  the  close  of  the  Middle 
Ages  were  the  most  advanced  and  prosperous  parts  of  Europe. 
Though  they  controlled  only  small  areas  of  land  they  had 
great  resources  from  their  commerce,  and  even  in  war  could 
hold  their  own  with  the  feudal  lords  fighting  in  the  old-fashioned 
way. 

They  were  strong  enough  to  fight  a  feudallord;  they  were 
not.  however,  strong  enough  to  fight  a  modern  king.  While 
they  were  building  up  their  power  at  the  expense  of  rival 
cities  and  at  the  expense  of  the  country  districts,  the  kings  of 
lands  to  the  west  of  them  were  quietly  engaged  in  uniting  all 
the  cities  and  the  country  districts,  too,  under  one  rule.  The 
cities  in  France  and  England  seemed  for  a  time  to  lose,  because 
they  were  forced  by  the  kings  to  make  concessions  to  each 
other  and  to  the  country  districts.  When,  however,  they  had 
become  used  to  consider  themselves  as  only  parts  of  a  bigger 
whole,  the  nation,  they  found  that  their  sovereign  was  far 
better  fitted  to  represent  their  interests  and  further  their 
progress  than  any  one  of  them  was  individually.  The  struggle 
of  the  independent  cities  of  Italy  and  Germany  against  the 


COMMERCE  AND  POLITICS  IN  LATER  MIDDLE  AGES     125 

national  states  of  England,  Spain,  and  France  was  not  decided 
until  after  the  discovery  of  America  and  the  sea-route  to  Asia, 
when  the  national  organization  proved  decisively  its  superiority 
to  the  municipal. 

141.  Rise  of  a  national  commercial  policy.  —  The  rise  in 
power  of  the  central  government  in  countries   like   England 
and  France  is  proved  by  the  appearance,  toward  the  close  of 
the  Middle  Ages,  of  a  national  commercial  policy.     The  reader 
will  remember  that  even  in  these  countries  the  towns  were  at 
first  so  independent  that  each  adopted  a  commercial  policy  of 
its  own;  as  though,  nowadays^  for  instance,  Boston  and  New 
York  and  Philadelphia  should  each  have  its  own  independent 
tariff  and  set  of  commercial  regulations.     A  merchant  of  Dover 
wras  a  foreigner  in  Southampton,  and  if  he  wanted  to  collect 
a  debt   due  him  from  a   Southampton   merchant   he  would 
appeal,  not  to  the  central  government  and  the  law  of  the  land, 
but  to  the  Dover  government;  and  the  Dover  government 
would  put  pressure  on  the  Southampton  government,  perhaps 
by  arresting  any  merchant  from  Southampton  and  holding 
his  goods,  until  the  debt  was  paid.     About  1300  the  English 
king  was  at  last  strong  enough  to  make  general  regulations  in 
matters  like  this  of  the  collection  of  debts,  and  about  the  same 
time  he  established  a  national  tariff  at  the  ports,  as  a  regular 
system,  and  forced  the  various  towns  to  give  up  the  right  to 
levy  what  dues  they  pleased.     A  similar  change  took  place  in 
France  at  nearly  the  same  time;  the  idea  grew  strong  that  the 
general  interest  of  all  Frenchmen  was  superior  to  the  particular 
interests  of  any  town  or  individual,  and  the  people  of  France 
began  to  look  to  the  king  instead  of  to  the  local  authorities 
for  protection  and  control. 

142.  Medieval  ideas  on  commerce.  —  When  commerce  was 
undeveloped  and  only  an  incidental  feature  in  the  economic 
life  of  peoples,  those  high  in  authority  in  church  and  state 
held  ideas  of  it  which   have   faded   away  as  commerce  has 
proved   its   power  and   shown   its   benefits.     Many  kinds   of 
commerce,  including  some  forms  of  money-lending  now  con- 


126  A  HISTORY  OF  COMMERCE 

sidered  legitimate,  were  prohibited  because  they  seemed  to 
give  a  man  something  for  nothing.  In  ordinary  trade  one 
man  was  thought  to  make  his  profit  at  the  expense  of  another, 
and  government  was  always  vigilant  to  protect  the  weaker 
party.  A  government,  moreover,  looked  on  foreign  commerce 
rather  as  a  privilege  of  its  citizens  than  as  their  right,  and 
used  it  freely  as  a  political  weapon  instead  of  considering  it 
an  economic  necessity.  The  ports  of  the  kingdom  were  the 
''king's  gates,"  which  he  could  open  or  close  at  his  pleasure, 
to  further  his  royal  policy. 

143.  Characteristic  features  of  commercial  policy.  —  Among 
the  characteristic  features  of  national  economic  policy  in  the 
later  centuries  of  the  Middle  Ages  we  find  the  following: 

(1)  Export  and  import  could  be  carried  on  only  by  favor 
of  royal  license,  which  was  granted  to  and  withdrawn  from 
groups  of  natives  and  foreigners  as  suited  the  king's  ideas. 

(2)  The  export  of  necessaries  was  frequently  prohibited 
(as  had  previously  been  the  custom  with  the  towns),  to  increase 
the  supplies  of  the  kingdom  and  keep  an  enemy  from  getting 
the  good  of  them. 

(3)  The  export  of  money,  as  a  specially  valuable  asset  of 
the  kingdom,  was  prohibited  and  its  importation  was  favored. 

(4)  The  growth  of  native  industries  was  stimulated  by  a 
variety  of  regulations.     The  English  cloth  manufacture  was 
protected,  for  instance,  in  the  following  ways:  the  export  of 
raw  material  (wool,  teasles,  etc.)  was  forbidden  from  time  to 
time,  that  the  home  manufacturer  might  supply  himself  more 
cheaply;  the  import  of  foreign  cloth  was  restricted;  and  the. 
wearing  of  fur  was  limited  to  certain  classes,  that  the  home 
market  for  woolen  manufacture  might  be  larger.     Among  the 
protected  industries  was  shipping.     "  Navigation  acts,"  requir- 
ing the  use  of  native  ships,  were  common,  though  they  ordi- 
narily remained  in  force  but  a  short  time  and  had  not  yet 
hardened  into  a  system. 

(5)  The  foreign  trade  of  a  country  was  not  only  restricted, 
as  at  present,  to  certain  points  on  the  frontier  where  duties 


•COMMERCE  AND  POLITICS  IN  LATER  MIDDLE  AGES    127 

<;ould  be  collected,  but  was  often  concentrated  in  one  or  more 
special  places,  the  "  staples."  The  government  could  then 
oversee  the  trade  more  easily,  could  collect  its  dues,  insure 
good  quality,  and  protect  merchants  more  readily,  and  it 
could  also  make  better  use  of  trade  as  a  weapon  of  policy, 
directing  the  stream  of  goods  where  it  pleased,  and  so  reward- 
ing or  punishing  other  states. 

QUESTIONS  AND  TOPICS 

1.  Review  the  sections  on  feudalism,  and  see  how  the  modern  system 
of  government  grew  up  from  feudalism  as  the  forces  which  had  created 
feudalism  were  reversed.     [Cf.  Seebohm,  Prot.  Rev.,  pp.  15-21. ] 

2.  Write  a  report  on  the  rise  or  decline  in  power  of  the  central  govern- 
ment in  one  of  the  following  countries,  in  the  period  1100-1500:   France, 
England,  Germany,  Italy,  Spain.    [Consult  the  current  history  manuals, 
or  the  encyclopedia.] 

3.  In  connection  with  sect.  140  read  the  sections  in  a  later  part  of 
the  book,  describing  the  advantages  which  have  come  to  Germany  and 
Italy  in  recent  times  by  their  union  under  strong  central  governments. 

4.  Write  a  report  on  medieval  doctrines  on  one  of  the  following 
subjects: 

(a)  Loans  at  interest. 

(6)  Profits  in  trade. 

[Cunningham,  Growth,  or  Ashley,  vol.  1,  chap.  3;  vol.  2,  chap.  6.] 

5.  Write  a  report  on   "protection"   in  the  medieval  state.     [See 
Cunningham  or  Ashley  on  commercial  policy,  or  read  J.  S.  Nicholson, 
The  English  corn  laws.] 

6.  What  has  been  the  history  of  the  meaning  of  the  word  staple? 
[Dictionaries,  especially  Murray's  New  English  Diet.;    Cunningham.] 

BIBLIOGRAPHY 

The  subject  of  this  short  chapter  takes  the  reader  within  the  bounds 
of  political  history,  and  he  is  referred  to  the  many  history  manuals  for 
further  reading  and  references.  The  growth  of  the  French  monarchy 
has  been  well  treated  by  Adams,  Civilization,  chap,  xiii,  or  Growth  of  the 
French  nation. 


PART  III.— MODERN  COMMERCE 

CHAPTER  XV 
EXPLORATION  AND  DISCOVERY 

144.  The  revolution  about  1500;  topics  to  be  considered.  — 
The  period  centering  about  the  year  1500  was  marked  by 
changes  so  rapid  and  so  extensive  that  they  deserve  the  name 
of  revolution.     The  changes  affected  not  only  the  intellectual 
life  of  Europe  (the  Renaissance)  and  its  religious  life  (the 
Protestant  Revolt  or  Reformation);  they  caused  a  revolution 
also  in  the  world  of  politics  and  in  the  world  of  industry  and 
commerce.     It  will   be   necessary  to   survey  some    of   these 
changes  before  we  return  to  the  narrative  of  the  history  of 
commerce.     Three  main  topics  will  occupy  the  attention:  first, 
the   extension   of  the   commercial   area   by   exploration   and 
discovery;  second,  the  development  of  the  commercial  organi- 
zation by  new  forms  of  cooperation;  third,  the  rise  of  modern 
states  in  Europe,  and  their  influence  on  the  growth  of  commerce. 

145.  Growth   of   geographical   knowledge.    Asia.  —  About 
the  year  1000,  to  most  people  in  Europe  "the  world"  meant 
scarcely  more  than  the  village  in  which  they  lived,  so  limited 
were  their  interests  and  their  knowledge.    Pilgrims  to  the 
holy  places  in  Palestine  brought  back  with  them  knowledge 
of  this  edge  of  Asia,  but  what  the  Greeks  and  Romans  knew 
of  that  continent  and  of  Africa  had  been  forgotten,  and  even 
the  better  educated  people  thought  of  the  outer  parts  of  the 
world  as  mysterious  regions,  wrapped  in  darkness  or  peopled 
with  prodigies,  when  they  thought  of  them  at  all.     The  growth 
of  the  Levant  trade  and  the  crusades  caused  an  increase  in 
interest  and  in  information.     After  the  year  1200,  when  a 
great  Mongol  or  Tartar  Empire  was  established  in  inner  Asia 
by  Genghis  Khan,  Europeans  began  to  penetrate  Asia  seeking 

128 


EXPLORATION  AND  DISCOVERY  129 

aid  from  the  Mongols  against  their  enemies  the  Turks.  Am- 
bassadors, missionaries,  merchants,  and  explorers  made  the 
journey  so  frequently  that  a  regular  guide-book  was  written 
by  an  Italian  soon  after  1300;  and  about  the  same  time  the 
Venetian  Marco  Polo  returned  from  a  long  stay  in  China  and 
described  his  travels.  He  had  gone  by  land,  through  Persia, 
Turkestan,  and  Mongolia,  and,  returning  by  sea,  he  could  tell 
also  about  Japan,  the  great  Malay  islands,  Burmah,  India,  etc. 
Before  the  invention  of  printing  knowledge  spread  slowly,  but 
the  maps  of  the  fifteenth  and  sixteenth  centuries  show  that 
the  results  of  these  explorations  were  not  lost,  and  Europe 
had  become  conscious  that  Asia  was  bounded  by  a  sea  on  the 
east. 

146.  Need  of  a  sea  route  to  Asia ;  means  of  navigation.  — 
The  explorations  by  land  in  Asia  were  of  great  importance  in 
spreading  knowledge  of  the  countries  from  which  the  wares 
of  the  Levant  trade  came,  but  they  were  of  little  assistance  to 
traders  who  sought  to  develop  commerce  on  the  old  routes. 
With  the  decline  of  the  Mongol  power  and  the  spread  of  the 
Turks,  passage  across  Asia  became  constantly  more  difficult. 
The  available  routes  finally  narrowed  to  one,  that  through 
Egypt,  and  trade  on  this  route  was  burdened  with  very  heavy 
tolls.     The  European  people  were  urged  by  powerful  economic 
motives  to  seek  out  the  sea  route  to  India  which  was  now 
believed  to  exist. 

The  means  of  navigation  were  still  those  of  the  later  Middle 
Ages.  The  ships  in  which  some  of  the  most  adventurous 
voyages  were  taken  were  of  fifty  tons  or  even  less.  The  rig 
had  been  improved  slightly,  so  that  the  ships  could  be  handled 
more  readily  than  when  they  bore  the  old  square  sails;  and 
instruments  for  ascertaining  the  position  at  sea  were  also 
improved.  Still,  when  we  add  to  the  actual  peril  of  distant 
voyages  the  imagined  dangers  which  the  minds  of  men  ascribed 
to  unknown  seas,  wre  must  admit  that  the  early  explorers  met 
a  test  of  courage  to  which  men  nowadays  are  rarely  put. 

147.  The   lead   in  maritime   exploration   taken  by  Prince 


130  A  HISTORY  OF  COMMERCE 

Henry  of  Portugal.  —  Italians  were,  in  general,  the  guides  who 
led  Europeans  through  the  seas  of  darkness  to  the  East.  Con- 
ditions at  home,  however,  forced  them  to  seek  service  abroad 
in  realizing  their  plans,  and  Portugal  was  the  first  of  the 
European  countries  to  effect  great  oceanic  discoveries.  The 
country  was  small  and  undeveloped,  but  it  enjoyed  in  the 
fifteenth  century  the  guidance  of  a  singularly  able  line  of 
kings.  It  had  in  the  person  of  Prince  Henry,  "the  Navigator," 
an  enthusiast  who  devoted  practically  his  whole  life  and  fortune 
to  the  cause  of  discovery.  When  but  twenty-four  years  old 
he  retired  from  the  world  to  a  promontory  at  the  southern 
extremity  of  the  country,  and  there  he  worked  for  over  forty 
years,  until  his  death  in  1460.  Prince  Henry  combined  the 
commercial  motive  with  missionary  zeal  and  a  medieval  hos- 
tility to  the  Mohammedans,  but  the  character  of  his  work 
was  entirely  modern  and  business-like.  He  gave  what  was 
most  needed  for  success,  organization;  he  attracted  sailors  and 
pilots  from  all  Europe;  stimulated  development  in  the  science 
and  art  of  navigation;  equipped  and  inspired  expeditions. 

148.  Exploration  of  the  West  Coast  of  Africa;  difficulties, 
real  and  imagined.  —  The  great  achievement  of  Portuguese 
navigation  was  the  discovery  of  the  sea  route  to  India  around 
Africa.  The  coast  of  the  northwest  corner  of  Africa  was 
well  known  to  sailors  of  several  European  countries,  and  the 
belief  was  current  in  many  minds  that  circumnavigation  was 
possible.  Some  Genoese  sailors  had  actually  attempted  to- 
reach  India  in  this  way  in  the  thirteenth  century,  but  they 
had  disappeared  without  leaving  a  trace.  There  was  all  the 
difference  in  the  world  between  the  theory  and  the  practice  of 
European  navigators;  the  limit  of  their  voyages  had  practically 
always  been  Cape  Bojador,  far  north  on  the  west  coast.  A 
strong  inshore  current  and  short  but  furious  storms  made 
coasting  dangerous.  The  coast  of  dreary  sand  dunes  afforded 
no  good  anchorage;  mist  or  dust  dimmed  the  air  and  frightened 
sailors  with  the  thought  that  they  were  actually  entering  the 
sea  of  darkness;  Cape  Bojador  was  a  forbidding  obstacle  in 


EXPLORATION  AND  DISCOVERY 


131 


that  it  projected  far  out  beyond  the  coast  line,  and  was  sup- 
posed to  be  extended  by  perilous  reefs.  Furthermore,  most 
people  submitted  to  the  opinion  of  ancient  philosophers,  that 
the  tropics  were  uninhabitable  by  reason  of  the  intense  heat 
of  a  blazing  sun,  which  approached  nearer  the  earth  in  those 
regions. 


DISCOVERIES 

OF  THE 

PORTUGUESE 

'  Longitude  30"   F><1  from  Gmnolctl     60°       MMAV  CHS.  00.        70° 


See  Sections  148-149. 

149,  Discovery  of  the  Cape  of  Good  Hope  (1487)  and  of 
the  sea  route  to  India  (1498).  —  Under  the  stimulus  of  Prince 
Henry  the  Portuguese  passed  Cape  Bojador  in  1434,  and  were 
rewarded  on  a  more  extended  voyage  about  ten  years  after- 
ward by  the  discovery  of  Cape  Verde.  The  name,  "Green 
Cape,"  is  significant;  the  explorers  had  passed  the  southern 
edge  of  the  desert  and  found  a  watered  country  with  waving 
palms.  In  this  enterprise,  as  in  most  others,  the  first  steps 
proved  to  be  the  hardest.  Though  progress  was  steady  it  was 
slow,  and  at  the  death  of  Prince  Henry  in  1460  the  Portuguese 


132 


A  HISTORY  OF  COMMERCE 


had  not  passed  beyond  Sierra  Leone.  They  had,  however, 
accumulated  valuable  experience  and  gained  confidence;  the 
long  period  of  preparation  fitted  them  to  advance  more  rapidly 
as  time  went  on.  In  1471  they  passed  the  equator,  without 
the  scorching  that  some  had  feared;  and  in  1487,  under  Diaz, 
they  turned  the  southern  extremity  of  the  Continent,  named 
by  the  sailor  the  Cape  of  Storms,  but  renamed  Cape  of  Good 
Hope  by  the  King,  as  an  augury  for  the  future.  The  illness 


Map  of  the  known  world  in  the  time  of  Columbus. 

and  death  of  the  King  prevented  the  Portuguese  from  utilizing 
their  discovery  immediately;  but  in  July,  1497,  Vasco  da  Gama 
was  despatched  with  a  fleet  bound  for  India,  which  anchored 
at  Calicut  (southwest  coast;  not  Calcutta),  in  May,  1498. 
Oceanic  commerce  with  India  had  begun,  and  the  tolls  and 
charges  which  had  hampered  trade  by  the  land  routes  were 
things  of  the  past. 

150.  Belief  that  Asia  could  be  reached  by  sailing  westward. 


EXPLORATION  AND  DISCOVERY  133 

—  While  the  Portuguese  were  pushing  on  down  the  west  coast 
of  Africa  in  their  search  for  a  route  to  India,  the  minds  of  some 
men  were  occupied  with  the  thought  that  the  same  object  could 
be  attained  more  easily  by  sailing  directly  west  from  Europe. 
The  earth  was  known  to  be  round  and  was  thought  to  be 
smaller  than  it  actually  is.  Asia  was  known  to  be  bounded 
by  a  sea  on  the  East.  Why  not  reach  India  by  sailing  around 
the  globe?  Perhaps,  they  thought,  the  east  coast  of  Asia  was 
but  a  little  way  from  the  west  coast  of  Europe  or  Africa. 
Skippers  who  ventured  to  the  Azores,  the  Canaries,  and  other 
islands  not  far  from  Europe,  brought  back  stories  of  foreign 
objects  washed  up  on  the  beaches,  or  of  land  dimly  descried 
on  their  voyages. 

The  belief  that  land  existed  beyond  the  horizon  was  com- 
monly held,  and  Columbus  does  not  deserve  the  credit  of 
originating  the  idea.  Nor  can  his  discovery  of  the  New  World 
in  1492  be  regarded  as  one  of  those  acts  without  which  the 
history  of  the  world  would  be  very  different.  The  Portuguese 
were  certain  to  touch  America  sooner  or  later  in  circumnavi- 
gating Africa,  for  they  planned  to  steer  due  south  from  Guinea 
to  the  latitude  of  the  Cape,  to  avoid  the  calms  and  currents 
of  the  coast,  and  an  equatorial  current  carried  their  ships 
westward.  Under  these  conditions  the  Portuguese  Cabral,  on 
his  way  to  India  around  the  Cape,  actually  did  land  on  the 
coast  of  what  is  now  Brazil,  in  1500. 

151.  Discovery  of  America  (1492) ;  partition  of  the  world 
outside  Europe  between  Spain  and  Portugal.  —  Columbus,  how- 
ever, certainly  deserves  the  fame  which  has  been  given  him, 
for  the  courage  he  showed  in  turning  theory  into  action;  and 
the  consequences  of  the  discovery,  however  we  apportion  the 
credit  for  it,  make  it  one  of  the  turning-points  in  the  world's 
history.  Europe  was  disappointed,  it  is  true,  in  the  hope  that 
a  shorter  route  to  India  had  been  found.  Balboa  proved  by 
the  discovery  of  the  "South  Sea,"  or  Pacific  Ocean  (1513), 
that  the  new  land  was  a  continent  by  itself,  and  the  great 
distance  between  America  and  Asia  became  known  by  the 


134  A  HISTORY  OF  COMMERCE 

voyage  of  Magellan  around  the  earth  (1519-1522),  "doubtless 
the  greatest  feat  of  navigation  that  has  ever  been  performed."" 
Time  was  needed  to  prove  that  America  offered  more  than 
Asia  to  build  up  European  commerce,  and  the  full  measure  of 
its  possibilities  was  not  realized  until  the  nineteenth  century. 
At  the  time  Portugal  seemed  to  have  gained  more  than  Spain. 
The  non-Christian  world  was  divided  between  these  two  powers. 
by  a  papal  decree,  which  gave  to  Portugal  Africa  and  Asia 
(except  the  Philippines)  and  to  Spain  the  Americas  (except 
Brazil).  So  long  as  other  European  states  obeyed  papal 
authority  and  feared  the  might  of  Spain  and  Portugal,  they 
were  bound  to  respect  this  division;  and  the  first  period  of 
discoveries  was  followed  by  a  series  of  voyages,  carried  on 
especially  by  English  and  Dutch,  seeking  a  passage  northeast 
or  northwest  through  Arctic  seas,  that  would  enable  them  to- 
evade  the  monopoly  granted  by  the  Pope. 

152.  Effect  of  the  discoveries  on  the  field  of  commerce; 
growth  of  a  world  commerce.  —  Contrasting  medieval  and 
modern  commerce  we  find  that  the  discoveries  produced  great 
changes  both  in  the  area  and  in  the  articles  of  trade.  Maritime 
commerce  in  the  Middle  Ages  was  restricted  in  general  to  the 
seas  of  Europe  (Baltic,  North,  Mediterranean,  Black)  and  to 
the  edge  of  the  Atlantic;  exchange  was  hindered  not  only  by 
physical  obstacles  but  also  by  the  claims  of  various  states  ta 
the  exclusive  control  of  inland  waters  (Hansa  in  the  Baltic,. 
Venice  in  the  Adriatic).  When  once  sailors  had  learned  to 
leave  the  coast  and  steer  boldly  into  the  open  ocean,  secure 
in  the  consciousness  that  they  were  approaching  not  a  "sea 
of  darkness"  but  a  land  much  like  that  which  they  had  left 
behind  them,  the  ocean  became  a  means  of  uniting  continents 
rather  than  of  separating  them.  The  principle  that  the  sea 
is  free  to  all  was  not  accepted,  it  is  true,  for  some  time;  states 
tried  to  extend  to  the  open  sea  the  same  narrow  principle  of 
exclusion  that  had  been  practised  with  respect  to  interior 
waters.  These  claims  led  to  bitter  national  conflicts  in  the 
sixteenth  and  seventeenth  centuries,  but  they  fell  gradually 


EXPLORATION  AND  DISCOVERY  135 

into  oblivion  as  the  hopelessness  of  making  them  effective 
became  apparent;  and  the  European  commerce  of  a  former 
period  expanded  into  a  world  commerce. 

153.  Effect  of  the  discoveries  on  the  wares  of  commerce.  — 
Europe  had   become  acquainted  with  Asiatic  wares   in  the 
course  of  the  Levant  trade,  so  that  the  market  for  them  was 
well  established  when  the  first  Portuguese  ships  returned  from 
India.     Transportation  by  the  sea  route,   however,  with  its 
diminished    costs    and    with    the    greatly    increased    cargoes, 
caused  such  a  decline  in  the  price  of  eastern  goods  that  the 
market  for  them  expanded  immensely.     What  had  before  been 
costly  luxuries  for  the  rich  became  now  a  part  of  their  regular 
necessaries,  and  became  for  other  classes  luxuries  or  comforts 
which  they  could  afford  to  purchase.     It  is  in  this  period  that 
tea,  coffee,  and  sugar  became  common  articles  of  consumption 
in  some  of  the  European  countries.     The  part  played  by  those 
three  articles  in  the  commerce  of  an  advanced  country  can  be 
seen  from  the  fact  that  before  the  end  of  the  eighteenth  century 
they  formed  over  one  fourth  of  the  total  imports  of  England. 
Other  wares,  such  as  Indian  textiles,  which  had  been  known 
to  Europe  before,  but  which  were  too  bulky  to  pay  for  the  im- 
port of  cheaper  grades,  could  now  be  placed  on  the  market  in 
large  quantities,  when  protective  duties  did  not  exclude  them. 

154.  Importance  of  the  precious  metals  in  the  American 
trade ;  effect  on  prices  in  Europe.  —  The  American  continent 
offered  at  first  only  one  class  of  wares  of  prime  importance, 
namely,  the  precious  metals.     The  Spanish  secured  great  quan- 
tities of  gold  in  the  early  years  of  their  conquests,  but  about 
1550  the  output  of  gold  was  exceeded  by  that  of  silver,  which 
reached  enormous  proportions,  as  a  result  of  the  discovery  of 
new  mines  in  Mexico  and  Peru,  and  by  the  use  of  the  amalga- 
mation process.     Before  1550  the  production  of  the  precious 
metals  in  Europe  and  Africa  exceeded  the  supply  from  the 
New  World,  but  then  the  balance  changed;  and  during  the 
seventeenth  century  the  American  supply  was  more  than  five- 
fold that  gained  in  the  Old  World.     The  result  was  an  increase 


136  A  HISTORY  OF  COMMERCE 

in  the  stock  of  money  in  Europe  so  great  that  a  revolution  in 
prices  ensued;  silver  became  so  plentiful  that  a  given  weight 
of  it  would  purchase  only  one  half  or  one  third,  sometimes 
even  one  fourth  or  one  fifth,  of  what  it  would  have  bought 
before  the  discovery  of  the  American  mines.  The  serious 
results  of  this  price  revolution  on  different  classes  in  Europe 
must  be  left  to  the  imagination  of  the  reader,  as  they  lie  outside 
the  scope  of  this  manual.  No  other  American  product  com- 
peted in  importance  with  silver,  in  the  early  period,  but  as  the 
North  American  continent  and  the  West  Indies  were  settled 
with  whites  and  negroes  some  important  staples  were  brought 
from  those  parts  to  Europe.  The  islands  proved  to  be  espe- 
cially well  suited  to  the  production  of  sugar,  while  the  mainland 
contributed  in  tobacco  a  ware  before  unknown  in  Europe, 
but  one  which  could  soon  rely  on  a  large  and  increasing  demand. 
Food  staples  like  maize  and  potatoes  continued  unimportant, 
not  only  as  wares  of  commerce  but  also  as  articles  of  European 
production,  until  comparatively  recent  times. 

165.  Improvement  in  the  means  and  methods  of  navigation. 
—  With  the  extension  of  navigation  new  qualities  were  needed 
.in  ships;  speed  to  cover  the  great  distances,  carrying  capacity 
for  the  storage  of  bulky  cargoes,  and  stability  sufficient  to 
ensure  safety  in  tropical  hurricanes  or  eastern  typhoons.  The 
medieval  galley,  rowed  with  oars,  was,  of  course,  unsuited  to 
long  voyages,  and  sails  came  into  universal  use.  The  favorite 
types  of  vessel  all  showed,  however,  the  influence  of  medieval 
models.  The  caravel,  of  small  tonnage  and  easily  managed, 
was  simply  a  galley  fitted  with  masts  and  sails.  The  galleon 
was  larger,  having  two  or  three  decks;  in  it  the  attempt  was 
made  to  unite  the  lines  and  speed  of  a  galley  with  the  stability 
and  dimensions  of  a  cargo  carrier.  Finally,  the  carrack,  with 
four  or  five  decks,  combined  great  carrying  capacity  with  the 
defensive  strength  of  a  floating  fortress.  Piracy  continued  to 
be  a  plague,  especially  in  the  Mediterranean  and  in  waters 
outside  Europe,  and  the  large  merchantman  with  a  con- 
siderable number  of  guns  enjoyed  a  great  advantage  over 


EXPLORATION  AND  DISCOVERY  137 

smaller  vessels.  We  read  of  ships  of  a  thousand  tons  and 
over.  The  size  of  the  Hanseatic  ships  trading  to  London 
increased  so  much  in  the  sixteenth  century  that  they  could 
no  longer  pass  London  Bridge,  or  lie  at  the  wharf  of  the  Steel- 
yard; and  the  increase  in  the  size  of  ships  caused  changes  in 
the  importance  of  ports,  by  which  Seville  gave  place  to  Cadiz, 
Rouen  to  Havre,  Dordrecht  to  Rotterdam. 

Improvements  were  effected  also  in  the  art  of  navigation, 
especially  in  the  means  of  determining  the  position  east  and 
west.  The  simple  means  of  the  later  Middle  Ages  could  give 
some  idea  of  a  vessel's  latitude,  but  very  little  of  its  longitude. 
The  introduction  of  the  log  in  the  seventeenth  century  enabled 
a  sailor  to  measure  distance  traversed  more  accurately,  and 
the  invention  of  the  chronometer  in  the  eighteenth  century 
gave  at  last  a  reliable  and  practical  means  of  determining 
longitude  at  sea.  Progress  in  scientific  astronomy  was  made 
of  service  to  sailors  by  tables  which  were  the  forerunners  of 
the  modern  "nautical  almanac";  and  charts  and  sailing  direc- 
tions became,  as  the  result  of  generations  of  experience,  more 
trustworthy  and  more  useful. 

QUESTIONS  AND  TOPICS 

1.  Character  and  life  of  Prince  Henry  of  Portugal.     [E.  G.  Bourne, 
Prince  Henry  the  Navigator,  Yale  Review,  Aug.,  1894,  3:  187-202,  re- 
printed in  Essays  in  historical  criticism,  N.  Y.,  1901;. or  one  of  the  read- 
ings in  the  bibliography.] 

2.  Measure  on  the  map  the  distances  traversed  in  the  voyages  in 
search  of  the  sea-route  to  India;  indicate  these  distances  on  a  straight 
line,  with  the  dates,  that  the  rapid  increase  in  the  extent  of  the  voyages 
may  be  apparent. 

3.  Early  life  and  first  voyage  of  Columbus.     [Bourne,  Spain,  chaps. 
1  to  3.] 

4.  Early  Christian  pilgrimages  to  the  East.     [Beazley,  chap.  1.] 

5.  European  explorers  in  Asia.     [Cheyney,  chap.  3;  Verne,  vol.   1, 
part  1;  Beazley,  chap.  3.] 

6.  Write  a  report  on  one  of  the  countries  of  the  East  visited  by  Marco 
Polo.     [See  the  translation  of  his  travels.] 

7.  Development  of  geographical  science  before  1500.     [Beazley,  In- 
troduction, chap.  5.] 


138  A  HISTORY  OF  COMMERCE 

8.  Make  tracings  of  typical  maps,  of  antiquity,  of  the  Middle  Ages, 
and  of  the  period  of  the  great  discoveries;    and  compare  them  with  a 
modern  map  of  the  world.    [See  maps  in  Beazley  and  Cheyney.] 

9.  Maritime   exploration   before   the   fifteenth   century.      [Beazley, 
chap.  4.] 

10.  What  were  the  means  and  methods  of  navigation  in  the  fifteenth 
century?    [See  Cheyney,  p.  53  ff.,  and  Fiske,  Discovery.] 

11.  Voyages  in  search  of  a  passage  to  India  through  the  Arctic  Ocean. 
[Oxley,  Romance,  chap.  6;   Verne,  vol.  1,  part  2,  chap.  3;   or  Payne.] 

12.  Write  a  report  on  the  history  of  tea,  coffee,  or  sugar  as  a  ware  of 
commerce.     [Use  the  references  suggested  for  wares  of  the  Levant  or 
Baltic  trade.] 

13.  Write  a  similar  report  on  gold,  silver,  or  tobacco. 

14.  Effect  of  the  fall  in  value  of  silver  in  England.     [Cunningham, 
Growth,  vol.  2,  sect.  182.] 

15.  Development  of  the  art  of  navigation  in  modern  times.    [Encyc. 
Brit.,  Navigation.] 

BIBLIOGRAPHY 

Classified  bibliographies  of  the  period  of  the  discoveries  will  be  found 
in  Cheyney,  and  in  Cambridge  modern  hist.,  vol.  1. 

General  accounts  will  be  found  also  hi  those  two  sources.  Cheyney's 
**  European  Background  includes  some  half  dozen  chapters  on  important 
topics  hi  the  history  of  commerce;  these  chapters  offer,  in  some  cases,  the 
only  available  reading  in  English,  and  the  book  can  be  warmly  recom- 
mended. Another  book,  which  is  inexpensive,  readable,  and  very  valuable, 
is  Beazley 's  **  Prince  Henry;  this  is  full  on  the  beginnings  of  exploration, 
and  has  an  especially  good  collection  of  early  maps.  The  first  part  of 
Fiske' s  **  Discovery  of  America  presents  an  admirably  written  survey 
of  conditions  leading  to  the  explorations.  The  first  volume  of  the  Ex- 
ploration of  the  World  by  Jules  Verne,  N.  Y.,  Scribner,  1879,  3  vols.,  covers 
the  medieval  period  as  well  as  that  of  the  great  discoveries;  it  has  the 
merits  and  failings  which  the  author's  name  suggests. 

For  Prince  Henry  and  the  Portuguese  discoveries  see  **  Beazley, 
Stephens,  Portugal,  chap.  7,  Cheyney,  chap.  4,  or,  for  a  brief  and  readable 
account,  Oxley,  Romance,  chap.  7. 

For  the  period  following  the  discoveries,  E.  J.  Payne,  Voyages  of  the 
Elizabethan  seamen,  London,  1880,  can  be  recommended;  it  contains 
original  accounts  of  the  exploits  of  the  great  English  seamen  of  the  time 
of  Elizabeth  (Hawkins,  Frobisher,  Drake,  etc.).  Howard  Pyle,  *  The  Buc- 
caneers, N.  Y.,  Macmillan,  and  David  Hannay,  The  sea  trader,  London, 
1912,  continue  the  narrative  to  a  later  period. 


CHAPTER  XVI 
DEVELOPMENT  OF  THE  ECONOMIC   ORGANIZATION 

156.  Agriculture.  —  The  next  important  subject  to  be  dis- 
cussed in  considering  the  great  changes  in  commerce  in  the 
modern  period  is  the  development  of  the  economic  organization. 
The  influence  of  the  discovery  of  new  lands,  new  routes,  and 
new  wares  is  so  obvious  that  the  discoveries  are  often  repre- 
sented as  the  chief  cause  of  the  growth  of  commerce  in  the 
modern  period.  They  were  unquestionably  very  important 
factors  in  this  growth,  but  European  commerce  was  developing 
without  them,  and  would  have  felt  their  influence  much  less 
if  it  had  not  been  changing  in  its  internal  structure.  Men 
were  applying  new  methods  of  cooperation,  which  enabled 
them  to  make  more  of  their  resources  at  home  and  to  utilize 
with  greatest  effect  the  opportunities  for  gain  abroad.  Even 
at  the  end  of  the  period  the  commerce  of  England  with  Europe 
was  larger  than  with  all  the  other  continents  together. 

We  shall  review  briefly  in  the  following  sections  the  main 
changes  in  the  different  branches  of  production.  The  topic  of 
agriculture  must  be  dismissed  with  but  a  few  words.  There 
was  a  general  movement  toward  freedom  of  the  agricultural 
classes  of  western  Europe  at  the  beginning  of  the  period.  Wars 
and  other  political  interruptions  checked  the  movement  in 
France,  and  brought  about  an  actual  decline  of  the  cultivators 
in  Germany;  England  was  the  only  important  country  in 
which  the  country  classes  became  perfectly  free.  In  Europe 
as  a  whole,  however,  the  conditions  of  production  in  agriculture 
were  decidedly  better  than  they  had  been  in  the  Middle  Ages, 
and  the  increased  produpt  supported  a  larger  population  and 
furnished  a  basis  for  a  more  extended  trade. 

139 


140  A  HISTORY  OF  COMMERCE 

167.  Development  of  manufacturing  organization  in  Eng- 
land ;  persistence  of  gild  restrictions  elsewhere.  —  In  manufac- 
tures, also,  there  was  a  movement  toward  freedom  in  the 
more  favored  countries.  We  shall  see,  in  the  history  of  Eng- 
land, how  greatly  English  manufactures,  and  the  commerce 
depending  on  them,  advanced  under  the  leadership  of  mer- 
chants and  capitalists  who  broke  through  the  old  gild  restric- 
tions. The  striking  feature,  however,  in  the  manufactures 
of  most  countries  of  this  period  is  the  maintenance  of  the 
gild  system,  which  became  a  most  serious  check  on  industrial 
advance.  It  will  be  remembered  that  the  gilds  grew  originally 
out  of  the  union  of  artisans  in  any  trade,  who  banded  together 
to  protect  their  interests,  and  who  were  granted  certain  privi- 
leges, especially  that  of  monopoly,  that  they  might  regulate 
the  trade  more  efficiently  and  so  protect  the  interests  of  con- 
sumers also.  At  the  present  time  the  interests  of  consumers 
are  sufficiently  protected  by  the  competition  of  producers,  who 
do  not  need  government  regulations  to  tell  them  that  they 
must  sell  good  wares  at  low  prices  if  they  desire  to  succeed; 
and  just  as  soon  as  exchange  becomes  sufficiently  active  to 
stimulate  competition  the  public  gains  by  having  restrictions 
abolished.  In  most  of  the  European  countries,  however,  the 
gild  privileges  and  restrictions  were  retained  until  the  nine- 
teenth century,  with  results  set  forth  in  the  following  paragraph. 

158.  Evils  of  the  gilds.  —  (1)  The  privilege  of  monopoly 
was  abused  by  limiting  entrance  to  the  gild  in  various  ways, 
so  that  production  was  restricted  and  prices  were  raised  to 
the  detriment  of  merchant  and  consumer.  Laborers  suffered, 
also,  by  the  lessened  demand  for  their  services.  (2)  Gilds 
came  into  frequent  conflict  over  the  question  as  to  which  had 
the  right  to  exercise  a  particular  branch  of  trade  or  manu- 
facture; these  quarrels  were  similar  to  those  arising  between 
trade  unions  at  the  present  time.  Manufacturers  suffered 
from  the  separation  of  allied  trades;  and  time  and  money, 
which  ought  to  have  gone  into  the  business,  were  wasted  in 
long  lawsuits.  (3)  The  full  members  of  the  gilds,  the  masters, 


DEVELOPMENT  OF  ECONOMIC  ORGANIZATION       141 

tried  to  keep  the  laborers  (apprentices  and  journeymen)  in  an 
inferior  position,  and  granted  promotion  by  favor  rather  than 
by  merit;  laborers  lost  the  incentive  to  good  work  and  were 
tempted  to  idleness  and  disorder.  (4)  The  masters  tried  to 
preserve  equality  among  themselves.  Any  master  who  was 
sufficiently  enterprising  to  attempt  to  extend  his  business  by 
introducing  improvements  or  by  employing  more  men  was 
pulled  back  to  the  general  level.  (5)  Technical  improvements 
were  prevented  also  by  the  regulations  which  were  adopted 
originally  to  secure  good  quality  of  the  product,  but  which 
hardened  into  a  routine  prescribing  the  details  of  every  process 
of  manufacture.  (6)  After  all  the  restrictions,  consumers  did 
not  get  good  quality  even  when  they  paid  high  prices.  They 
could  not  punish  the  producers  of  poor  goods  by  withdrawing 
their  custom;  and  scamped  work,  adulteration,  and  fraud  were 
common. 

159.  Development  of  the  commercial  organization.  Rise 
of  wholesalers.  —  Reviewing  the  substance  of  the  last  few 
paragraphs  we  find  that  the  advance  in  agriculture  was  local 
and  incomplete,  while  in  manufactures  it  failed,  in  great 
measure,  to  displace  a  wornout  system  inherited  from  a 
preceding  period.  Only  in  commerce  itself  were  the  changes 
rapid  and  general  in  western  Europe.  Methods  of  business 
which  before  had  been  practised  in  only  a  few  Italian  cities, 
wrere  now  adopted  in  the  country  north  of  the  Alps,  and  de- 
veloped rapidly  in  the  leading  commercial  districts. 

A  class  of  professional  wholesale  merchants  now  sprang  up. 
Before  this  time,  of  course,  merchants  had  on  occasion  dealt 
in  considerable  quantities  of  wrares,  but  even  the  leading 
medieval  merchants  seem  to  have  been  glad  to  keep  up  their 
business  by  selling  in  small  quantities  to  consumers.  Only  in 
the  last  century  of  the  Middle  Ages  do  we  find  in  Germany 
merchants  who  confined  themselves  entirely  to  wholesale  trade. 
As  yet  they  had  not  become  specialists  in  any  one  particular 
ware.  An  idea  both  of  the  variety  and  of  the  extent  of  their 
transactions  can  be  gained  from  the  business  of  John  von 


142  A  HISTORY  OF  COMMERCE 

Bodeck,  who  was  a  merchant  in  Frankfort  about  1600.  He 
bought  silk  and  drugs  in  Venice,  spices  in  Amsterdam,  and 
sent  them  for  sale  to  Hamburg;  he  bought  iron  and  wax  in 
Hamburg  and  sent  them  to  Spain;  he  bought  indigo  and  wool 
in  Spain  and  sent  them  to  Amsterdam  and  Antwerp;  he  bought 
rye  in  Amsterdam  and  sent  it  to  Genoa. 

160.  Development   of   the   commission   trade;   services  of 
factors.  —  Bodeck    must    have   traded    in   these   wares    often 
without   knowing   much  about   them  himself,   and  generally 
without  seeing  them.     Such  a  business  would  have  been  im- 
possible in  the  Middle  Ages  when  a  merchant  accompanied  his 
wares  or  shared  his  responsibilities  with  a  few  associates.     It 
was  made  possible  now  by  the  development  of  the  commission 
trade.     Commission  merchants,  or  faptors,  made  it  their  pro- 
fession "to  buy  and  sell  for  other  business  men  for  a  certain 
profit  which  is  given  them  for  their  trouble  by  the  principals." 
Sometimes  they  were  in  business  on  their  own  account  also; 
sometimes  they  were  specialists  in  various  lines.     A  writer  of 
the  seventeenth  century  distinguished  five  classes:  those  who 
lived  in  a  manufacturing  or  commerical  center  and  bought 
goods  for  others;  those  who  sold  goods  for  others;  the  corre- 
spondents of  business  men  and  bankers  who  made  collections 
and  remittances  of  money  for  them;  forwarders,  who  received 
and  forwarded  goods  at  places  of  transshipment;  and,  finally, 
the  agents  for  carriers,  who  distributed  and  collected  the  load 
of  a  freight  wagon  in  a  city.     The  duties  of  a  mercantile  factor, 
in  general,  were  to  advise  his  principal  frequently  concerning 
the  market  for  wares,  the  course  of  exchange,  etc.,  to  acknowl- 
edge letters  punctually,  and  to  follow  orders  exactly.     The 
commission  varied  from  5  per  cent  of  the  value  of  the  goods  in 
the  West  Indies  to  2  per  cent  or  even  less  in  some  of  the 
European  countries. 

161.  Improvement  in  means  of  communication ;  posts.  — 
Commission  business  of  the  kind  described  in  the  preceding 
paragraphs  implied  much  greater  frequency  of  communication 
among  merchants,  and  it  is  noteworthy  that  the  system  of 


DEVELOPMENT  OF  ECONOMIC  ORGANIZATION       143 

public  posts  was  founded  in  Europe  about  the  beginning  of 
this  period,  and  developed  rapidly  during  it.  Relays  of  horses 
with  postilions  and  with  the  necessary  officials  were  established 
by  the  governments  of  various  countries,  to  insure  regular 
communication;  the  system  was  meant  at  first  only  for  official 
business,  but  was  soon  extended  to  serve  the  needs  of  private 
individuals.  Some  idea  of  the  advance  can  be  got  from  a 
statement  made  at  the  opening  of  the  railroad  from  Strassburg 
to  Basel,  giving  the  time  required  to  go  from  the  one  to  the 
other  of  these  places  in  earlier  times.  The  distance,  about 
seventy-five  miles,  or  less  than  the  distance  between  New  York 
and  Philadelphia,  was  covered  in  the  sixteenth  century  by  a 
coach  in  eight  days,  in  1600  by  a  diligence  in  six  days,  in!700 
by  the  same  vehicle  in  four  days,  and  in  1800  by  "express" 
(Eilwagen)  in  two  days  and  a  half.  In  the  eighteenth  century 
a  man  in  England  could  send  a  letter  fifteen  miles  for  a  penny, 
thirty  miles  for  twopence,  and  so  on  up,  the  sum  increasing 
with  the  distance;  postage  from  London  to  France  was  tenpence, 
to  New  York  a  shilling. 

Merchants  needed  no  longer  to  rely  upon  the  friendly 
offices  of  the  traveler  who  happened  to  be  going  in  the  desired 
direction,  and  were  free  from  the  expense  of  special  couriers. 
Knowledge  of  market  conditions  in  distant  places  spread  more 
broadly  and  more  rapidly  than  it  had  ever  done  before.  Shrewd 
speculators  could  still  sometimes  make  great  profits  by  getting 
possession  early  of  some  special  bit  of  news,  but  the  essentials 
of  commercial  information  were  available  for  all.  The  modern 
newspaper  grew  up,  by  several  stages,  from  written  reports 
that  were  passed  around  as  circulars  in  this  period,  telling  of 
the  state  of  the  market,  prices,  conditions  of  transportation,  etc. 

162.  Need  of  closer  association  among  merchants;  risks  of 
commerce.  —  The  most  striking  change  in  the  organization  of 
commerce,  regarding  especially  that  with  distant  countries 
and  other  continents,  was  the  growth  of  association  among 
merchants.  We  have  noted  the  development  in  the  Middle 
Ages  of  the  partnership  and  other  forms  of  association;  we 


144  A   HISTORY  OF  COMMERCE 

have  now  to  study  the  rise  of  great  companies  which  form  a 
connecting  link  with  the  corporations  and  trusts  of  the  present 
day. 

Among  the  reasons  for  the  rise  of  great  commercial  com- 
panies the  following  are  to  be  noted.  (1)  Distant  commerce 
was  exposed  constantly  to  armed  attack.  The  protection  of 
a  country's  navy  extended  but  a  small  distance  from  home. 
Ships  in  European  waters  were  threatened  by  pirates  in  times 
of  peace,  by  privateers  in  times  in  war;  in  waters  outside 
Europe  they  faced  trade  rivals  from  other  European  countries, 
and  hostile  natives  who  were  not  bound  by  the  civilized  rules 
of  peace  and  war.  Distant  commerce  was  essentially  military 
in  character,  and  required  for  successful  prosecution  greater 
military  force  than  a  small  group  of  men  could  afford.  (2) 
Partly  because  of  dangers  suggested  above,  partly  because  of 
the  natural  perils  of  the  sea  under  the  conditions  of  navigation 
at  the  time,  partly  because  of  the  very  novelty  of  the  trade, 
distant  commerce  was  very  hazardous.  If  five  men  sent  out 
a  ship  they  might  make  a  great  fortune,  but  they  might  lose 
everything.  If  they  associated  themselves  with  ninety-five 
others  and  together  sent  out  twenty  ships  they  were  pretty 
sure  to  lose  some  of  these,  but  they  were  pretty  sure  to  make 
from  the  other  ships  enough  to  return  large  profits. 

163.  Association  required  by  government;  reasons.  —  It  was 
natural,  under  the  circumstances,  that  associations  of  men 
should  spring  up  for  carrying  on  commerce  in  distant  parts. 
We  must  note  further,  however,  that  these  associations  were 
required  by  European  governments,  that  a  certain  field  was 
assigned  to  each  company  in  which  it  was  given  a  monopoly, 
and  that  in  this  field  trade  by  individuals  and  by  other  asso- 
ciations was  prohibited.  The  reasons  for  this  course  were,  in 
brief,  as  follows: 

(1)  The  peoples  of  distant  countries  did  not  distinguish 
between  individual  merchants.  As  all  Chinamen  look  alike 
to  us,  so  all  Englishmen  or  even  all  Europeans  were  alike  to 
them.  An  unscrupulous  trader,  who  cheated,  robbed,  or 


DEVELOPMENT  OF  ECONOMIC  ORGANIZATION       145 

killed  a  native,  escaped  the  consequences  of  his  crime  and  left 
them  to  be  borne  by  his  countrymen  who  sought  later  to  carry 
on  the  trade.  The  home  government  could  not  punish  such 
offences,  and  it  could  not  afford  to  let  them  continue.  It 
required,  therefore,  that  a  man  proposing  to  trade  to  a  distant 
country  should  have  an  interest  in  the  permanent  welfare  of 
the  trade,  by  making  him  contribute  money  to  the  association, 
and  subscribe  to  its  rules. 

(2)  The  government  could  diminish  the  risks  of  distant 
commerce  by  assuring  merchants  who  spent  money  in  building 
up  a  trade  that  they  should  not  be  deprived  of  the  fruits  of 
their  labors  by  newcomers  who  had  made  no  sacrifices.     It 
seemed  as  proper  to  encourage  in  this  way  the  investment  of 
capital  in  commerce  as  to  encourage  investment  in  manufac- 
tures by  granting  patents. 

(3)  Finally,  governments  were  led  naturally  to  apply  the 
prevalent  ideas  of  gild  regulation  to  distant  commerce,  and 
found  some  practical  advantages  in  doing  this;  it  was  easier 
to  tax  and  to  regulate  an  association  of  men  than  a  number  of 
individuals. 

164.  Association  in  the  form  of  the  regulated  company.  — 
Many  of  the  objects  enumerated  above  could  be  obtained  by 
union  in  what  was  called  a  "regulated  company."  The  regu- 
lated company  had  a  monopoly  of  a  certain  field  of  trade,  and 
established  regulations  which  were  binding  on  the  members 
trading  in  that  field.  Every  one,  however,  who  secured  ad- 
mission by  paying  the  entrance  fee  and  promising  obedience 
to  the  rules,  traded  thenceforth  with  his  own  capital,  and 
kept  his  profits  for  himself;  there  was  no  pooling  of  capital  or 
profits.  The  character  of  such  a  company  may  be  suggested 
to  readers  by  the  organization  of  the  modern  stock  exchange. 
No  one  who  is  not  a  member  can  trade  on  the  exchange,  and 
every  member  is  bound  to  follow  certain  rules  in  his  dealings, 
but  every  member  keeps  his  capital  and  profits  distinct  from 
those  of  the  others. 

The  larger  part  of  the  early  English  commercial  companies 


146  A   HISTORY  OF  COMMERCE 

were  regulated  companies  of  this  kind.  To  a  certain  extent 
they  attained  the  objects  of  association  which  have  been 
enumerated  above;  some  of  the  worst  evils  of  individual  trade 
were  impossible  so  long  as  the  company  adopted  wise  regulations 
and  could  force  members  to  live  up  to  them. 

165.  Objections  to  the  form  of  the  regulated  company.  — 
Still,  the  regulated  company  was  at  best  a  loose  association. 
Individual  traders  had  no  greater  interest  in  it  than  the  amount 
of  their  entrance  fees,  and  regarded  their  momentary  individual 
interests  as  more  important  than  the  permanent  interests  of 
the  group.     This  weakened  the  control  of  the  company  over 
the  associates,  and  rendered  difficult  the  prevention  of  abuses. 
A  strong  and  active  policy  was  hardly  possible,   moreover, 
when  associates  kept  the  bulk  of  their  capital  in  their  own 
hands,  and  could  withdraw  in  periods  of  adversity,  so  that 
the  resources  available  to  push  the  interests  of  the  association 
diminished  when  most  needed. 

The  problem  set  before  Europe  in  this  condition  of  affairs 
was  as  important  as  it  was  difficult.  The  future  of  European 
commerce,  even  of  European  civilization,  depended  on  some 
solution  which  would  make  from  the  individual  impulse  to 
gain,  the  instinctive  selfishness  of  every  man,  a  collective  force 
which  would  enable  a  number  of  men  to  work  for  gain  together. 
The  partnership  had  united  the  interests  of  a  very  few  men, 
simplifying  the  problem  by  starting  with  members  of  the 
same  family,  who  were  naturally  bound  together.  The  relation 
of  merchant  and  factor  was  another  move  in  the  right  direction, 
as  it  united  in  loyal  support  of  each  other  two  men  separated 
by  considerable  distance,  and  with  no  other  common  interest 
than  that  of  their  business.  The  principle  of  association 
must,  however,  be  extended  far  beyond  the  bounds  of  factor- 
ship,  or  partnership,  or  of  the  regulated  company,  if  Europe 
was  to  rise  to  the  opportunity  presented  by  trade  with  distant 
countries. 

166.  The  joint  stock  company,  and  its  advantages.  —  The 
problem,  reviewed  briefly,  was  to  get:  (a)  a  permanent  stock 


DEVELOPMENT  OF  ECONOMIC  ORGANIZATION       147 

of  capital,  (6)  so  large  that  it  must  be  contributed  by  a  very 
considerable  number  of  people,  (c)  under  the  management  of 
a  few  people  who  would  employ  it  efficiently,  and  for  the 
advantage  of  all  the  contributors.  The  solution  was  the  joint 
stock  company.  Early  examples  of  this  form  of  association 
are  to  be  found  in  Italy,  but  it  developed  north  of  the  Alps 
only  after  the  founding  of  the  Dutch  and  English  East  India 
Companies  about  1600. 

Let  us  see  how  the  stock  company  meets  the  demands  for 
an  improved  form  of  association  which  were  imperative  at 
this  time.  (1)  It  insures  permanence  of  operation.  Individual 
stockholders  or  managers  may  die,  but  the  company  does  not 
die  with  them;  their  places  are  filled,  and  the  company  con- 
tinues with  its  original  capital.  (2)  The  contributor  does  not, 
like  a  partner,  need  to  be  a  business  man;  does  not,  like  a  silent 
partner,  need  to  have  especial  trust  in  the  person  of  the  man- 
agers. The  contributor  may  be  a  foreigner,  a  child,  or  a  woman, 
and  the  sources  from  which  capital  may  be  drawn  are  thus 
immensely  extended.  (3)  Capitalists  of  every  class  are  willing 
to  contribute  to  the  undertaking  because  of  the  peculiar  safe- 
guards which  this  form  of  association  offers  to  them.  In  the 
first  place,  though  the  investment  is  permanent,  from  the 
standpoint  of  the  company,  and  so  enables  the  management 
to  carry  out  far-sighted  plans,  yet  it  endures,  from  the  stand- 
point of  the  individual  subscriber,  only  so  long  as  he  pleases. 
The  system  of  transferable  shares  enables  a  stockholder  to  sell 
out  his  interest  at  any  time,  and  so  change  his  investment. 
In  the  second  place,  the  stockholders  have  a  voice  in  the 
management  of  the  company  proportionate  to  their  interest 
in  it.  They  choose  the  persons  to  whom  they  will  entrust 
the  active  direction  of  affairs,  require  periodical  reports  on  the 
course  of  business  from  the  managing  directors,  and  have  the 
power  to  change  the  directors  if  the  conduct  of  affairs  is  not 
satisfactory. 

167.  Good  and  bad  sides  of  joint  stock  companies.  —  The 
reader  would  err  if  he  assumed  that  all  the  advantages  sug- 


148  A  HISTORY  OF  COMMERCE 

gested  above  were  secured  immediately  on  the  founding  of  the 
first  stock  companies.  Experiments  of  various  kinds  were 
tried  at  the  start,  and  only  gradually  did  the  companies  take 
the  form  which  they  have  assumed  in  modern  law.  The 
English  East  India  Company,  for  instance,  which  was  founded 
in  1600  as  a  regulated  company,  was  made  over  into  a  joint 
stock  company  by  degrees,  and  could  not  be  regarded  as 
permanently  established  on  this  basis  for  over  fifty  years. 
Generations  of  bitter  experience  were  required  to  teach  people 
the  possible  dangers  as  well  as  the  possible  benefits  of  this 
form  of  association. 

Incompetence  and  corruption  were  prevalent  in  the  man- 
agement of  affairs.  The  worst  abuses  of  our  modern  corpo- 
rations give  one  but  a  faint  idea  of  the  enormities  that  were 
perpetrated  in  the  early  period  of  joint  stock  history.  In  spite 
of  all,  the  joint  s.tdck  companies  accomplished  the  purpose  for 
which  they  were  created;  they  attracted  capital  at  home, 
stimulated  the  prosecution  of  a  definite  policy  abroad,  and 
extended  commercial  interests  as  individuals  or  other  forms 
of  association  would  have  been  unable  to  do.  The  American 
reader  may  remember  that  Virginia  was  founded  and  Massa- 
chusetts was  developed  by  joint  stock  companies.  Other 
forms  of  association,  especially  partnership,  were  more  suitable 
for  many  purposes,  and  increased  constantly  in  number;  but 
alongside  them  several  hundred  stock  companies  .grew  up  in 
Europe  of  which  perhaps  a  hundred  were  founded  to  develop 
great  commercial  and  colonial  undertakings. 


QUESTIONS  AND  TOPICS 

1.  Write  a  report  on  the  break-up  of  the  manor  and  the  rise  of  modern 
farming  in  England.     [Cheyney,  Indust.  hist.,  chap.  5,  or  one  of  the  other 
manuals  of  English  economic  history.] 

2.  Write  an  essay  comparing  the  restrictions  of  the  gilds  with  those 
of  modern  trade-unions. 

3.  What  are  the  functions  of  wholesale  merchants  and  hence  what 
was  the  importance  of  their  rise  at  this  time? 


DEVELOPMENT  OF  ECONOMIC  ORGANIZATION        149 

4.  Who  were  some  of  the  notable  merchants  of  the  period?    [Bourne, 
Romance,  chap.  12,  or  English  merchants.] 

5.  What  examples  can  you  find  nowadays  of  the  different  classes  of 
commission  merchants  mentioned  in  the  text?    What  commission  do  they 
charge? 

6.  Write  a  report  on  the  rise  of  the  modern  postal  system.     [See 
Encyc.  Brit.,  articles  Post-office,  Postage  stamps.] 

7.  Write  a  similar  report  on  the  history  of  the  newspaper.    [Encyc. 
or  Bucher,  **  Indust.  Ev.,  chap.  6.] 

8.  Endeavor  to  understand  the  reasons  for  mercantile  association, 
and  for  the  requirement  of  this  association  by  the  government,  by  re- 
viewing the  changes  in  conditions  since  this  period,  and  seeing  why 
association  is  not  necessary  or  compulsory  now. 

9.  Study  Cunningham,  Growth,  vol.  2,  sect.  188,  on  regulated  and 
joint-stock  companies,  and  pick  out  examples  of  each  type  in  the  follow- 
ing sections. 

10.  Write  a  report  on  the  various  forms  which  the  (English)  East 
India  Company  assumed  during  the  first  century  of  its  existence,  and 
the  reasons  for  the  changes.    [Cunningham,  or  Hunter,  **  Hist,  of  British 
India.] 

11.  Write   a   report   on   abuses  and   corruption   in   this   company. 
[Hunter.] 

BIBLIOGRAPHY 

A  bibliography  accompanies  the  chapter  by  Cunningham  on  **  Eco- 
nomic change,  Cambridge  mod.  hist.,  vol.  1,  which  furnishes  the  best 
brief  account*in  English  of  topics  considered  in  this  chapter. 

Histories  of  various  countries  at  the  period  of  the  Reformation  present 
descriptions  of  their  agricultural,  industrial,  and  commercial  organization; 
but  I  know  of  no  general  and  comprehensive  treatment  in  English  of 
topics  treated  here. 

The  only  topic  on  which  there  is  abundant  material  available  is  that 
of  commercial  organization.  See  Cheyney,  **  Eur.  background,  chap.  7 
(chartered  commercial  companies),  chap.  8  (typical  American  colonizing 
companies) ;  Hewins,  **  English  trade,  chap.  3  (trading  companies) ; 
Hunter,  Hist.  Brit.  India  (East  India  Co.).  R.  B.  Westerfield,  *  Middle- 
men in  English  business,  Trans.  Conn.  Acad.,  May,  1915,  19;  111-445, 
is  a  scholarly  study  of  the  development  of  the  organization  of  marketing, 
and  W.  R.  Scott,  *  The  constitution  and  finance  of  joint-stock  companies, 
Cambridge  Univ.  Press,  3  vol.,  1910-1912,  is  an  authoritative  work  on 
the  history  of  that  subject. 


CHAPTER  XVII 
CREDIT  AND  CRISES 

168.  Growth  of  credit  business  and  of  banking.  —  The  rise 
of  the  joint  stock  companies  was  a  great  step  in  the  development 
of  the  power  of  capital  and  of  credit.  Individual  savings, 
which  before  might  have  been  hoarded  and  made  useless  to 
society,  were  drawn  from  their  hiding-places  to  form  the  capital 
and  loans  by  which  the  great  companies  extended  the  scope  of 
commerce  in  this  period.  Another  step  in  advance,  which 
deserves  notice  here,  was  the  extension  of  banking  north  of 
the  Alps.  The  medieval  doctrine  that  it  was  wrong  to  take 
interest  on  loans  lost  its  force  when  it  appeared  that  loans 
were  wanted  by  merchants  who  would  put  them  to  a  good 
use;  and  society  concluded  that  it  was  wise  to  encourage  the 
lending  of  money  by  permitting  the  lender  to  take  interest  for 
it.  There  is  a  great  difference,  however,  between  the  lending 
by  an  ordinary  individual,  who  has  more  than  he  knows  what 
to  do  with,  and  the  business  of  lending  as  practised  by  a 
banker.  The  difference  is  this,  that  an  ordinary  individual 
lends  his  own  money,  while  a  banker  lends  that  of  somebody 
else.  When  credit  operations  have  become  sufficiently  exten- 
sive the  banker  appears  as  a  man  who  makes  dealing  in  credit 
his  profession.  He  steps  in  between  the  people  who  have 
capital 'but  lack  the  ability  or  inclination  to  employ  it  profit- 
ably, and  the  people  who  have  the  ability  and  inclination  to 
conduct  business  enterprises  but  lack  the  desirable  amount  of 
capital.  The  banker  is  a  specialist  in  this  profession,  and  by 
his  special  knowledge  can  do  more  than  any  one  else  could  to 
collect  the  surplus  capital  and  place  it  where  it  can  be  used 
to  the  best  advantage. 

150 


CREDIT  AND  CRISES  151 

169.  Description  of  the  rise  of  discount  and  deposit  banking 
in  England.  —  The  history  of  banking  is  too  large  a  topic  to 
be  considered  here  in  detail.     The  early  banks  were  marked 
by  a  number  of  individual  peculiarities,  and  occupied  often  a 
public  position  as  agents  of  the  government;  these  points  need 
not    detain    us.     The    development    of    ordinary    commercial 
banking  can  be  illustrated  by  the  business  of  the  London  gold- 
smiths in  the  seventeenth  century.     The  goldsmiths  were  re- 
quired by  the  character  of  their  stock  to  keep  strong-boxes 
("safes"),  which  served  the  purpose  of  a  modern  safe-deposit 
vault;  and  they  united  dealings  in  gold  and  silver  coin  with 
their  original  business.     They  were  naturally  the  persons  to 
whom  a  man  would  apply  who  wanted  the  means  of  keeping 
cash  and  other  valuables  more  securely  than  was  possible  on 
his  person  or  at  his  office  or  home;  and  thus  they  received  in 
time  considerable  deposits  from  merchants  and  others.     Prob- 
ably they  made  some  charge  at  first  for  the  accommodation, 
but   soon  they  were   encouraging   deposits   by   paying   some 
interest,  and  by  undertaking  to  perform  services  such  as  col- 
lection and  remittance  for  their  customers.     They  could  afford 
to  do  this  by  reason  of  the  fact  that  they  did  not  let  the  cash 
lie  idle  in  their  vaults,  but  lent  it  to  the  government  and  to 
business  men;  they  had  become  banks  of  discount  and  deposit. 
A  tract  published  in  1676,  entitled  "The  Mystery  of  the  New 
fashioned  Goldsmiths  or  Bankers,"  gives  this  account  of  their 
operations.     "Having  thus  got  Money  into  their  hands,  they 
presumed  upon  some  to  come  as  fast  as  others  was  paid  away, 
and  upon  that  confidence  of  a  running  Cash  (as  they  call  it) 
they  begun  to  accommodate  men  with  moneys  for  Weeks  and 
Moneths,  upon  extraordinary  gratuities,  and  supply  all  neces- 
sitous  Merchants  that   overtraded  their  Stock,   with  present 
Money   for  their   Bills   of   Exchange,   discounting   sometimes 
double,  perhaps  treble  interest  for  the  time,  as  they  found  the 
Merchant  more  or  less  pinched." 

170.  Rise  of  "money-power"  as  shown  in  the  history  of 
the   Fugger  family.  —  The   reader  will   perhaps   comprehend 


152  A  HISTORY  OF  COMMERCE 

more  clearly  the  great  development  of  business  in  the  modern 
period  if  we  follow  here  the  history  of  one  of  the  families  of 
South  Germany  which  rose  to  the  first  rank  among  the  money 
powers.  The  Fugger  family  was  descended  from  a  simple 
country  weaver,  who  settled  in  Augsburg  and  died  there  in 
1409.  His  sons  rose  to  high  place  in  the  crafts  of  weavers 
•and  merchants,  and  accumulated  wealth,  like  many  others, 
by  trade  in  spices,  silks,  and  woolen  cloth.  Under  a  grandson, 
Jacob  (1459-1526),  who  had  been  trained  in  Venice,  the  family 
business  underwent  a  striking  change.  We  should  call  Jacob 
a  financier  rather  than  a  merchant.  He  and  his  brothers 
continued,  it  is  true,  to  deal  in  merchandise,  but  they  made 
their  great  profits  by  dealing  in  money  and  capital.  If  a  prince 
or  king  wanted  a  loan  they  made  it  to  him,  charging  a  good 
round  sum  in  commission  and  interest,  gaining  often  a  security 
for  their  advance,  such  as  a  mine  or  the  right  to  collect  some 
taxes,  from  which  they  could  make  good  profit.  If  a  king  like 
Charles  V,  whose  dominions  were  widely  scattered,  wanted  to 
disburse  some  of  his  revenues  in  a  distant  province,  they 
undertook  to  sell  him  the  necessary  exchange  and  avoided 
the  transportation  of  the  coin  itself.  Their  business  extended 
from  Hungary  and  Poland  in  the  East  to  Spain  in  the  West, 
from  Antwerp  in  the  North  to  Naples  in  the  South. 

171.  Description  of  the  Fugger  business.  —  The  records  of 
the  Fugger  firm  have  been  preserved,  and  we  can  learn  the 
extent  and  character  of  its  business  by  the  statement  of  its 
resources  as  they  appeared  in  1527.  The  figures  are  in  florins, 
<of  which  each  had  a  purchasing  power  equal  roughly  to  eight 
dollars  to-day. 

Mines  (Tyrol,  Hungary) 270,000 

Other  real  estate  (city  and  country) 150,000 

Merchandise  (copper,  silver,  brass,  textiles) 380.000 

Cash  (in  home  office  and  14  factories) 50,000 

Loans 1,650,000 

Private  accounts  of  associates 430.000 

Various  current  affairs 70,000 

3,000,000 


CREDIT  AND  CRISES  153 

The  reader  will  note  the  large  sums  appearing  under  mines 
and  merchandise,  showing  that  the  Fuggers  still  maintained 
their  dealings  in  wares,  after  they  made  finance  their  special 
business.  The  chief  item,  however,  is  that  of  loans,  which 
included  sums  borrowed  by  the  Pope,  the  Emperor,  and  kings 
of  Europe.  The  Fuggers  and  other  great  financiers  had  immense 
influence  on  the  politics  of  their  time,  for  they  could  command 
money  and  credit  while  sovereigns  were  still  trying  in  vain  to 
build  up  an  adequate  revenue  system.  They  made  fabulous 
profits,  over  50  per  cent  a  year,  in  prosperous  periods,  and  the 
Fuggers  managed  to  make  an  average  profit  of  over  30  per  cent 
a  year  for  over  thirty  years.  In  the  case  of  most  firms,  however, 
there  were  lean  years -as  well  as  fat  ones,  and  the  general 
average  would  be  very  much  less.  More  striking  than  the 
rate  of  profit  is  the  increase  in  the  size  of  the  capital.  Taking 
two  Italian  banking  firms,  the  Peruzzi  about  1300,  and  the 
Medici  about  1440,  and  comparing  them  with  the  Fuggers  in 
1546,  we  find  that  the  capital  was  about  as  follows,  expressed 
in  modern  purchasing  power:  Peruzzi,  $800,000,  Medici  $7,500,- 
000,  Fuggers  $40,000,000. 

172.  Weakness  of  the  Fugger  and  other  banking  firms.  — 
The  great  financial  firms  of  the  sixteenth  century  seem  to- 
have  been  premature.  They  lacked  the  permanence  of  the 
later  joint  stock  companies,  for  they  still  retained  the  medieval 
form  of  a  company  based  chiefly  on  family  relationship,  and 
required  constant  reorganization.  Their  success  in  the  hazard- 
ous operations  of  the  time  depended  entirely  on  the  sagacity 
of  the  heads  of  the  family,  and  as  genius  cannot  be  transmitted 
indefinitely  they  went  to  pieces  ordinarily  in  the  third  genera- 
tion from  their  establishment.  The  head  of  the  Fugger  firm 
about  1550  tried  to  wind  up  the  business  and  withdraw  the 
capital,  but  found  it  impossible  to  do  this,  and  became  involved 
in  more  and  more  enterprises.  The  balance  of  the  firm  in 
1563  showed  decided  weakness;  members  of  the  family  began 
to  quarrel  among  themselves;  and  the  firm  finally  lost  in  un- 
fortunate loans  practically  all  its  accumulations.  The  bank- 


154  A   HISTORY  OF  COMMERCE 

ruptcy  of  one  of  these  firms  involved  wide-spread  disaster,  for 
as  time  went  on  they  carried  on  their  business  less  and  less  on 
the  money  contributed  by  members,  and  more  and  more  on 
their  credit.  All  classes  in  the  community  —  nobles,  burghers, 
peasants  whose  savings  did  not  exceed  ten  florins,  even  servants 
• —  deposited  their  money  at  interest  with  the  financiers,  and 
were  involved  in  their  fall. 

173.  Description  of  business  in  Antwerp  in  the  sixteenth 
century.  —  After  considering  the  new  forms  of  business  from 
the  standpoint  of  individual  firms  it  will  be  profitable  to  study 
them  in  the  city  that  was  the  business  center  of  the  time, 
where  all  the  great  firms  were  represented  by  agents.     This 
city,  in  the  first  part  of  the  sixteenth  century,  was  Antwerp, 
which  rose  as  the  medieval  port  of  Bruges  declined.     There 
have  been,  of  course,  greater  cities  and  greater  markets  since 
that  time,  but  never  before  or  since,  it  is  said,  has  the  world 
seen  such  concentration  of  the  trade  of  different  peoples  in  a 
single  place.     The  town  owed  its  development  almost  entirely 
to  the  foreigners  who  flocked  there  to  trade,  and  though  it  saw 
less  of  Italians  and  Hanseatics  than  Bruges  had  done,  it  was 
the  one  great  gathering  place  for  the  Portuguese,  Spanish, 
English,  and  German  merchants  who  were  now  the  leaders. 
It  is  said  that  over  five  hundred  vessels  sailed  in  or  out  of 
the  port  in  one  day,  and  that  the  English  merchants  alone 
employed  over  20,000  persons  in  the  city.     The  poet  Daniel 
Rogiers  said  of  the  Antwerp  exchange,  "One  heard  there  a 
confused  murmur  of  all  languages,  one  saw  there  a  motley 
mixture  of  all  possible  costumes;  in  short  the  Antwerp  bourse 
seemed  to  be  a  little  world  in  which  all  parts  of  the  great  were 
united."     In  contrast  with  Bruges,  trade  in  Antwerp  was  almost 
entirely  unrestricted,  and  this  was  perhaps  the  chief  reason 
why  the  merchants  of  the  time  selected  it  as  the  place  in  which 
to  develop  the  new  forms  of  business. 

174.  Rise   of   the   Antwerp   exchange ;   its   significance.  — 
Antwerp  presented  in  the  sixteenth  century  the  first  case  of 
a  great  bourse  or  exchange,  that  is,  a  place  in  which  men 


CREDIT  AND  CRISES  155 

meet  daily  and  effect  their  exchanges  without  displaying  and 
transferring  the  wares  themselves,  by  the  use  of  paper  securities 
representing  the  wares.  Such  an  institution  cannot  exist  until 
the  volume  of  trade  is  large  enough  to  cause  a  steady  and 
continuous  flow  of  wares,  in  contrast  to  the  spurts  that  marked 
the  period  of  the  fairs.  It  requires,  moreover,  that  the  objects 
dealt  in  be  of  such  a  kind  that  they  can  be  represented  at 
the  exchange  by  some  document  or  sample,  so  that  the  buyer 
can  learn  the  quality  of  the  ware  without  actually  inspecting 
it.  This  is  possible  when  a  ware  can  be  graded,  put  into  a 
certain  class  the  characteristics  of  which  are  so  closely  defined 
and  so  well  known  that  the  buyer  needs  only  to  decide  whether 
he  cares  to  take  a  certain  quantity  at  a  certain  price. 

175.  Development  of  business  on  the  exchanges;  produce 
and  money.  —  The  use  of  the  word  "ware"  in  the  foregoing 
description  may  suggest  the  produce  exchange  as  the  earliest 
and  most  important  form  of  the  exchange.  Produce  of  various 
kinds,  especially  pepper,  did  form  an  object  of  exchange  trade 
in  Antwerp;  and  there  was  a  considerable  development  of  the 
produce  exchange  later  in  Amsterdam.  At  the  "candle-auc- 
tions" on  the  Royal  Exchange  of  London  in  the  seventeenth 
century,  goods  were  offered  with  an  inch  of  lighted  candle  on 
the  desk,  and  were  knocked  down  before  the  candle  went  out; 
a  single  parcel  of  silk,  indigo,  or  spice  sold  in  this  way  was 
sometimes  worth  half  a  million  dollars.  The  produce  exchange, 
however,  did  not  reach  its  full  development  until  the  nineteenth 
century,  and  we  shall  leave  its  significance  in  the  commercial 
organization  for  later  consideration. 

The  "ware"  which  formed  the  main  object  of  trade  on  the 
Antwerp  exchange  was  loanable  capital,  represented  by  various 
paper  instruments.  Princes  who  desired  to  borrow  money, 
and  who  formerly  would  have  applied  to  individual  financiers 
like  the  Fuggers,  turned  to  the  exchange  of  Antwerp  or  of 
Lyons,  where  loanable  capital  from  all  over  Europe  was  col- 
lected. Through  the  medium  of  the  exchange  a  French  king 
could  and  did  borrow  money  of  a  Turkish  pasha;  and  it  was 


156  A   HISTORY  OF  COMMERCE 

said  that  payments  amounting  to  a  million  crowns  were  made 
in  a  single  morning  without  the  use  of  a  penny  of  cash. 

176.  Advantages  offered  to  industry  and  commerce  by  the 
exchanges.  —  Antwerp  and  Lyons  had  served  especially  politi- 
cal needs  in  their  loans;  they  were  embarrassed  by  the  insol- 
vency of  royal  debtors,  and  soon  declined.     Their  place  was 
taken  by  Amsterdam,  London,  Hamburg,  Frankfort,  and  other 
cities,  and  with  the  rise  of  these  new  money  centers  a  change 
of  importance  is  to  be  noted.     The  new  exchanges  attracted 
capital   for  investment   in   private  or  semi-private  economic 
undertakings,  serving  the  needs  of  the  new  companies  which 
were  being  established.     Ordinary  people  with  comparatively 
small  savings  would  not  have  known  (as  they  would  not  know 
now)  where  to  invest  their  money  if  they  had  not  had  the  stock 
exchange  to  turn  to  for  an  indication  of  enterprises  seeking 
capital,   and  of  the  current   price  of  the  stock.     The  stock 
exchange  was  the  natural  and  necessary  accompaniment  of 
the  stock  company. 

Shares  of  trading  and  industrial  companies  and  of  public 
debts  became  the  objects  of  a  regular  commerce,  which  was  not 
confined  by  national  boundaries,  but  which  drew  capital  from 
all  sources.  When  shares  of  the  Dutch  East  India  Company 
were  put  on  the  market  in  1602  they  were  taken  up  to  a  con- 
siderable extent  by  capitalists  of  Antwerp  who  no  longer  had 
use  for  their  money  at  home;  much  of  the  money  needed  to 
rebuild  London  after  the  fire  of  1666,  and  a  large  part  of  the 
capital  of  the  Bank  of  England,  came  from  the  Dutch;  shares 
of  the  English  companies  trading  with  Asia  and  Africa  circu- 
lated freely  on  the  Amsterdam  exchange;  a  loan  to  the  German 
Emperor  was  floated  in  London. 

177.  Growth  of  speculation ;  early  abuses.  —  Modern  forms 
of  speculative  business  grew  up  with  the  exchanges.     A  pam- 
phlet published  as  early  as   1542  described  the  "monstrous 
thing"  that  Antwerp  merchants  had  devised;  they  bet  with 
each  other  on  the  course  of  foreign  exchange,  one  saying  it 
would  be  2  per  cent,  one  3  per  cent,  etc.,  and  afterwards  they 


CREDIT  AND  CRISES  157 

settled  by  paying  the  differences.  This  is  substantially  the 
same  operation  as  that  which  is  carried  on  regularly  to-day. 
When  the  trade  in  shares  of  stock  was  established  traders 
would  speculate  on  a  rise  or  a  fall,  or  a  combination  of  both. 
Shrewd  speculators  organized  a  system  of  news  gathering  and 
forwarding  which  gave  them  the  first  knowledge  of  important 
events  affecting  the  price  of  securities,  and  enabled  them  to 
anticipate  the  turn  of  the  market.  London  speculators  got 
word  through  a  private  channel  of  the  signing  of  the  treaty  of 
Rijswijk  in  1697,  a  day  before  the  English  ambassador  arrived 
with  the  official  announcement;  their  eagerness  to  buy  bank 
stock  aroused  suspicion,  and  the  reason  for  their  purchase 
appeared  when  the  news  was  published  and  the  price  of  the 
stock  rose  from  84  to  97. 

Underhanded  methods  of  trade  were  common.  Speculators 
would  set  afloat  rumors  to  depress  the  price  of  securities,  and 
then  buy  in.  One  day  during  the  reign  of  Anne  in  England  a 
well-dressed  man  rode  furiously  through  the  street  proclaiming 
the  death  of  the  Queen.  The  news  spread  and  the  funds  fell; 
the  Jew  interest  on  the  exchange  bought  eagerly,  and  were 
suspected  later  of  being  responsible  for  the  hoax,  though  it  was 
not  proved  against  them.  The  Englishman,  Child,  who  made 
a  fortune  in  speculation,  and  who  was  called  in  a  pamphlet  of 
1719  "the  original  of  stock-jobbing,"  would  have  one  set  of 
brokers  spread  rumors  of  disaster,  and  sell  a  little  of  his  stock 
publicly,  while  another  set  bought  for  him  "with  privacy  and 
caution";  in  a  few  weeks  he  would  reverse  the  process  and  come 
out  ten  or  twenty  per  cent  ahead. 

178.  Dangers  of  the  new  system  of  business;  promotion  of 
unprofitable  enterprises.  —  The  appeal  of  joint  stock  companies 
to  the  public  through  the  medium  of  the  stock  exchange 
proved  to  be  so  effective  in  gathering  capital  that  a  great 
many  worthless  undertakings  were  floated.  When  times  were 
good,  that  is,  when  enterprises  had  proved  successful,  when 
people  had  saved  money  for  investment  and  looked  with 
confidence  to  the  future,  almost  anything  in  the  shape  of  a 


158  A   HISTORY  OF  COMMERCE 

company  could  get  subscribers  to  its  stock.  The  reader  should 
note  that  there  were  two  sides,  one  good  and  one  bad,  to  the 
new  methods  by  which  commerce  was  being  developed.  The 
facility  of  getting  capital  from  a  great  number  of  subscribers 
made  possible  more  and  larger  undertakings  than  had  been 
known  before,  and  was  an  unmixed  benefit  when  the  new 
undertakings  were  devised  to  fill  a  real  need  of  society.  There 
was,  however,  a  separation  before  unknown  between  the  sub- 
scriber and  the  undertaking;  the  contributor  of  capital  might 
be  entirely  ignorant  of  the  economic  basis  of  the  enterprise, 
and  might  sink  his  money  for  a  return  which  came  late  or  not 
at  all.  There  was  thus  a  chance  for  the  diversion  of  the  capital 
of  society  to  worthless  purposes;  the  business  organization  had 
become  more  powerful,  but  at  the  same  time  more  delicate 
and  subject  to  derangement.  We  find  in  this  period  the 
beginning  of  commercial  crises  marked  by  the  misdirection  of 
invested  capital,  disappointment  of  investors,  and  distrust  and 
lethargy,  until  spirits  rose  with  the  recovery  of  lost  ground, 
and  good  times  began  again. 

179.  Description  of  the  "Bubble  Period"  in  England. — 
Commercial  crises  occurred  in  all  of  the  advanced  countries 
during  this  period.  We  shall  not,  however,  attempt  an  enu- 
meration of  them  here,  but  shall  use  the  available  space  for  a 
description  of  the  most  important  crisis,  that  which  affected 
both  England  and  France  about  1720. 

The  crisis  in  England  was  closely  connected  with  the  course 
of  the  South  Sea  Company,  which  had  been  established  in 
1711  as  a  trading  corporation.  The  company  had  secured  the 
right  to  export  slaves  to  the  Spanish  colonies,  had  developed 
a  promising  whale-fishery,  and  was  thought  to  be  a  large  and 
flourishing  concern.  It  was  then  transformed  into  a  financial 
company,  with  the  bold  plan  of  assuming  the  whole  national 
debt,  for  which  it  made  extravagant  offers.  "The  large  sum 
offered  by  the  company,  which  made  success  impossible,  stim- 
ulated the  imaginations  of  the  people,  who  fancied  that  a  privi- 
lege so  dearly  purchased  must  be  of  inestimable  value,  and  the 


CREDIT  AND  CRISES  159 

complication  of  credulity  and  dishonesty,  of  ignorance  and 
avarice,  threw  England  into  what  it  is  scarcely  an  exaggeration 
to  term  a  positive  frenzy." 

All  classes  rushed  to  buy  the  stock,  which  at  one  time  was 
quoted  at  1,000.  Then  the  weakness  of  the  scheme  became 
apparent;  the  stock  fell  as  rapidly  as  it  had  risen,  and  investors 
or  speculators  were  ruined  in  large  numbers.  This  was  only 
one  of  the  bubbles  which  were  inflated  and  which  burst  about 
this  time.  Other  companies  were  promoted  for  making  salt 
water  fresh,  for  extracting  silver  from  lead,  for  trading  in 
human  hair,  and  for  a  wheel  of  perpetual  motion.  Insurance 
was  now  coming  into  prominence,  and  this  offered  a  favorite 
field  for  promoters.  Subscriptions  were  received  for  companies 
that  proposed  to  insure  against  losses  of  servants,  against 
burglars  and  against  highwaymen;  one  scheme  was  "Plummer 
and  Petty 's  Insurance  from  Death  by  drinking  Geneva"  (gin). 
We  get  a  vivid  idea  of  the  spirit  of  the  period  from  the  fact  that 
one  promoter,  who  announced  a  company  "  for  an  undertaking 
which  shall  in  due  time  be  revealed,"  secured  2,000  guineas  in 
a  single  morning,  with  which  he  immediately  made  off. 

180.  The  crisis  of  the  Company  of  the  Indies  in  France.  — 
Just  before  the  time  of  the  English  crisis  one  curiously  similar 
in  character  occurred  in  France.  A  Scotchman,  John  Law, 
who  Avas  an  able  banker  and  financier,  promoted  a  Company  of 
the  West,  expanded  later  into  the  Company  of  the  Indies, 
which  united  with  its  commercial  projects  an  attempt  to 
finance  the  government.  Extravagant  ideas  were  formed  of 
the  possibilities  of  Law's  "system,"  and  the  roads  to  Paris 
were  blocked  by  people  hurrying  there  to  speculate  in  shares. 
Two  of  the  ablest  scholars  in  France  deplored  the  madness  at 
one  interview,  and  at  the  next  found  themselves  bidding 
against  each  other.  Coachmen,  cooks,  and  waiters  became 
millionaires  by  lucky  speculation;  tradespeople  in  the  street 
where  the  exchange  was  established  made  fortunes  by  letting 
out  their  stalls  and  chairs.  The  price  of  stock  rose  until  it 
frightened  even  the  promoter  of  the  system,  who  interfered  in 


160  A  HISTORY  OF  COMMERCE 

the  hope  of  checking  speculation,  but  who  found  soon  that  he 
was  unable  to  check  either  the  rise  or  the  fall  of  the  stock. 
The  crash  which  quickly  followed  was  especially  serious,  as  the 
whole  currency  consisted  now  of  discredited  notes  issued  by 
the  company.  Ruin  was  widespread,  and  credit  received  a 
blow  which  made  the  promotion  of  legitimate  enterprises 
difficult  for  a  long  time  thereafter. 

QUESTIONS  AND  TOPICS 

1.  Prepare  yourself  to  see  the  significance  of  the  facts  of  this  chapter 
by  reviewing  the  functions  and  benefits  of  credit  institutions  like  banks. 
[See  Bullock,  Introd.,  chap.  9,  or  other  current  manuals  of  economics.] 

2.  Write  a  report  on  the  way  in  which  churchmen  and  scholars  came 
to  justify  the  taking  of  interest  on  loans.      [Cunningham,  Growth,  or 
Ashley,  **  EC.  hist.,  vol.  2,  sect.  65  and  others  following,  esp.  72.] 

3.  Fill  in  the  outline  of  the  text,  sect.  169,  by  details  to  be  found  in 
Cunningham,   Growth,   vol.  2,   sect.   180. 

4.  Write  a  report  on  the  business  career  of  Sir  Thomas  Gresham, 
one  of  the  great  English  financiers  of  the  sixteenth  century.     [Encyc., 
Diet,  of  nat.  biography,  and  references  in  those  sources.] 

5.  Write  a  report  on  Antwerp  in  the  sixteenth  century.    [See  Motley, 
Rise  of  Dutch  Republic,  N.  Y.,  1858,  vol.  1,  81  ff.,  chap.  13.] 

6.  Benefits  and  dangers  of  speculation.    [Hadley,  Economics,  chap.  4.} 

7.  Manias   and   panics,   modern   and   recent.     [Bourne,   Romance, 
chap.    11.] 

8.  Write  a  report  on  one  of  the  following  topics: 

(a)  The  tulip  mania.    [Oxley,  Romance  of  commerce,  chap.  3.] 
(6)  The  "Bubble"  period  in  England,  [Cunningham,  Growth,  vol. 
2,  sect.  218;  Oxley,  chap.  2;  cf.  Lecky,  Hist,  of  England,  and  cf .  Macaulay's 
history  of  bubbles  about  the  time  of  the  founding  of  the  Bank  of  England.] 

(c)  John  Law  and  the  Mississippi  Bubble.     [Oxley,  chap.  1.] 

(d)  The  Fugger  family.    [Paul  Van  Dyke,  A  captain  of  industry  of 
the  sixteenth  century,  Harper's  Magazine,  June,  1910,  120:    276-284.] 

BIBLIOGRAPHY 

As  the  subjects  of  this  chapter  have  been  treated  generally  by  special- 
ists, and  considered  in  their  relation  to  modern  economics  rather  than 
earlier  history,  the  reading  is  scattered,  and,  for  our  purposes,  unsatis- 
factory. 

The  chapter  by  Cunningham  in  the  first  volume  of  the  Cambridge 
modern  history  covers  in  part  the  ground  of  this  chapter.  The  important 
commercial  crises  are  described  in  the  histories  of  England,  France,  etc. 


CHAPTER   XVIII 
THE  MODERN   STATE  AND  THE   MERCANTILE  SYSTEM 

181.  Growth  of  modern  states  under  the  influence  of  com- 
merce. —  If  the  modern  reader  is  impressed,  in  studying  the 
history  of  Europe  before  1500,  with  the  influence  on  commerce 
of  the  lack  of  strong  government,  he  will  be  equally  impressed, 
in  the  period  from  1500  to  1800,  with  the  strength  of  govern- 
ment and  with  the  important  part  it  played  in  commercial 
development.     We  have  here  to  sketch  in  brief  the  changes  in 
political  conditions,  leaving  to  later  chapters  a  consideration 
of  the  details  as  they  appear  in  the  history  of  different  countries. 
Commerce  itself  was  the  great  force  that  broke  the  power  of 
feudalism.     Commerce  crept  through  the  barriers  that  kept 
localities  apart;  it  established  a  circulation  of  wares  through  a 
large  area  of  country;  and  it  concentrated  wealth  in  the  cities 
which  it  built  up.     These  were  the  very  changes  needed  to 
allow  the  world  to  escape  from  feudal  anarchy,  and  to  construct 
a  system  of  government  similar  to  that  which  the  Romans  had 
employed.     Kings  had  now  subjects  able  and  willing  to  pay 
taxes,  and,  by  means  of  commerce,  they  could  transport  their 
taxes,  turn  the  proceeds  into  any  shape  they  chose,  and  apply 
them  wherever  it  was  necessary. 

182.  Decline  of  feudal  power  with  the  rise  of  mercenary 
armies.  —  A  large   part   of  the  new  revenues  was  spent   by 
governments  in  .strengthening  their  military  position.     Feudal 
lords  were  good  fighters  in  the  old-fashioned  way,  and  would 
not  give  up  their  local  power  without  a  struggle.     They  had 
to  yield   finally,   however,   before  the  standing  armies  which 
kings  called  into  existence  towards  the  close  of  the  Middle 
Ages.    Feudal  lords  loved  to  fight,  but  they  were  only  amateurs, 

161 


162  A  HISTORY  OF  COMMERCE 

after  all,  and  did  not  make  fighting  a  business.  The  merce- 
naries, on  the  other  hand,  whom  kings  collected  as  soon  as  they 
could  afford  the  expense,  were  professionals,  who  submitted 
to  a  certain  amount  of  discipline  because  they  could  make  a 
living  by  doing  so.  Enterprising  men  collected  a  number  of 
recruits,  taught  them  to  use  their  arms,  and  drilled  them  until 
they  counted  for  far  more  than  an  equal  number  of  untrained 
men;  the  leaders  studied  tactics  and  strategy,  and  knew  how 
to  make  the  most  of  their  superiority.  The  leaders  were 
perfectly  willing  to  let  their  troops  to  any  one  who  could  pay 
the  price,  but  as  feudal  lords  were  always  in  want  of  ready 
money  the  advantages  of  the  new  armies  went  almost  entirely 
to  the  kings.  The  introduction  of  gunpowder  in  warfare 
increased  the  superiority  of  the  mercenary  armies,  by  adding 
to  the  value  of  training,  and  here  again  the  kings,  with  ready 
money  to  invest  in  the  latest  improvements,  had  an  advantage. 
183.  Growth  in  power  of  the  central  government  as  shown 
in  the  development  of  taxation.  —  By  the  year  1500  the  process 
had  gone  so  far  that  many  of  the  states  of  Europe  had  assumed 
a  shape  substantially  like  that  which  they  have  to-day;  and 
feudalism  as  a  great  political  force  was  dead.  Government 
could  now  proceed  to  develop  on  the  basis  of  an  extended 
territory.  Some  measure  of  the  gain  of  the  central  govern- 
ment in  power  can  be  had  by  noting  the  increase  of  its  resources 
from  taxation.  English  taxes  yielded  about  half  a  million 
pounds  in  the  sixteenth  century,  seven  and  a  half  million  in 
the  next  century,  and  about  forty  million  towards  1800.  In 
little  over  a  hundred  years  the  yield  of  taxes  in  Prussia  in- 
creased twenty-eight  fold.  The  revenue  system  was  still  crude 
and  wasteful.  Every  European  state  followed  at  one  time  or 
another  the  practice  of  raising  money  by  selling  the  right  to 
hold  an  office.  Every  European  state  lost  money,  not  only  by 
the  inefficiency  of  the  revenue  system,  but  also  by  corruption 
of  officials;  often  half  or  more  of  money  that  the  people  paid 
in  taxes  never  reached  the  treasury.  In  spite,  however,  of 
these  inevitable  faults,  national  resources  were  concentrated 


MODERN  STATE  AND  MERCANTILE  SYSTEM        163 

as  they  had  never  been  before,  and  the  central  government 
gained  a  power  before  unknown. 

184.  Persistence    of   medieval    conditions    in    the    modern 
period.  —  From  the  modern  standpoint  no  better  field  could  be 
found  for  the  use  of  this  power  than  in  the  reform  of  internal 
conditions.     Centuries  after  feudalism  had  lost  its  controlling 
position  the  local  differences  and  the  spirit  of  separatism  which 
marked  the  feudal  period  remained  to  plague  the  merchant 
and  the  statesman.     Commerce  was  hindered  by  local  varia- 
tions in  laws  and  in  weights  and  measures;  by  the  persistence 
of  barriers  to  the  development  of  trade  and  manufacture  which 
had  grown  up  in  the  medieval  system  of  tolls  and  gilds;  by  the 
maintenance  of  the  class  distinctions  marking  feudal  society, 
and  putting  on  a  different  basis  the  merchant,  the  agriculturist, 
and  the  noble.     A  country  like  England,  which  early  threw  off 
the   most   oppressive   of  its   medieval   institutions,   gained   a 
great  start  over  countries  where  they  were  allowed  to  continue. 
Statesmen  in  these  other  countries  recognized  the  need  of  re- 
form, and  made  attempts  to  realize  it  from  time  to  time;  they 
made  slow  progress,  not  only  because  the  task  of  reforming 
old  customs  was  at  best  tedious  and  expensive,  but  also  because 
their  attention  was  distracted  from  the  task  for  much  of  the 
time  by  the  pressure  of  foreign  affairs. 

185.  Attempts  at  reform,  leading  in  many  cases  to  over- 
regulation.  —  All  the  European  governments  in  this  period  did 
pay  attention  to  the  development  of  internal  resources.     One 
of  the  chief  features  of  the  mercantilist  theory,  that  animated 
government  policy  during  the  seventeenth  and  eighteenth  cen- 
turies, was  the  emphasis  laid  on  the  circulation  of  money  and 
wares   inside   the   country.     The   new   national   governments 
helped  to  further  internal  commerce  by  repressing  disorder, 
and  by  reforming,  to  some  extent  at  least,  the  system  of  laws 
and  courts  to  which  business  men  could  appeal  for  the  settle- 
ment of  disputes.     Most  of  the  governments  paid  considerable 
attention  also  to  the  development  of  the  postal  system. 

Governments  could  serve  their  people  well  in  ways  like 


164  A  HISTORY  OF  COMMERCE 

these,  but  unfortunately  they  expended  their  energy  on  othei 
objects  that  were  useless  or  harmful.  "The  state  moulds  men 
into  whatever  shape  it  pleases,"  was  an  idea  of  the  time, 
which  led  to  an  enormous  amount  of  government  regulation. 
In  few  states  of  the  Continent  was  a  man  free  to  seek  his  profit 
where  he  would ;  he  was  entangled  in  a  network  of  government 
regulations  that  fixed  the  rules  of  his  trade,  the  prices  of  his 
wares,  even  the  articles  which  he  might  or  might  not  consume. 
An  excellent  example  is  furnished  by  the  grain  trade,  which 
governments  regulated  so  strictly  that  in  many  cases  laws 
caused  the  very  famines  which  they  were  designed  to  prevent. 
186.  Attention  distracted  from  internal  reforms  by  foreign 
interests.  —  A  consciousness  that  government  regulation  had 
gone  too  far  for  the  interests  of  commerce  grew  strong  before 
the  end  of  the  eighteenth  century,  when  a  school  of  thinkers, 
the  physiocrats,  protested  earnestly  against  it.  Their  for- 
mulas, "don't  govern  too  much,"  "let  things  alone"  (laisser 
jaire),  were  to  be  realized  in  the  nineteenth  century.  At  the 
time,  however,  they  had  little  effect;  the  faith  in  the  power  of 
government  was  still  strong  in  the  minds  of  rulers,  and  their 
attention  was  distracted  by  other  interests.  When  rulers  had 
crushed  the  resistance  of  their  subjects,  and  established  their 
absolute  authority,  they  had  a  surplus  of  power  which  they 
were  inclined  to  apply  abroad.  The  period  from  the  sixteenth 
to  the  eighteenth  centuries  is  filled  with  strife  between  the 
European  states,  each  attempting  to  get  possession  of  some  of 
the  territory  and  power  of  a  rival.  The  states  of  Europe  were 
still  young,  with  all  the  vigor  and  all  the  inexperience  of  youth, 
and  not  until  they  had  tried  conclusions  with  each  other  were 
they  willing  to  settle  down  as  they  have  done  in  the  nineteenth 
century.  It  was  said  above  that  internal  reform  was  the  best 
object  of  government  expenditure  "from  the  modern  stand- 
point." Kings  and  peoples  were  not  modern,  and  to  a  king  of 
the  time  one  of  the  best  objects  appeared  to  be  a  war  with 
another  king  by  which  he  might  get  more  people  under  his 
power. 


MODERN  STATE  AND  MERCANTILE  SYSTEM        165 

187.  Wars  occasioned  by  religious  and  dynastic  interests.  — 
In  tracing  later  the  commercial  histories  of  the  different  coun- 
tries it  will  be  necessary  to  refer  occasionally  to  these  wars, 
but  it  will  conduce  to  clearness  if  we  stop  a  moment  here  to 
examine  their  causes  and  character.     Some  of  the  wars  were 
religious,  growing  out  of  the  Protestant  revolution.     The  states 
of  the  South  remained  Catholic,  and  those  of  the  North  became 
Protestant  with  comparatively  little  opposition,   but   in  the 
center,  in  France  and  Germany  especially,  where  neither  side 
had  at  first  a  clear  supremacy,  the  Protestant  movement  led 
to  disastrous  civil  wars. 

Another  series  of  wars  may  be  called  dynastic,  as  they 
grew  out  of  the  ambitions  of  rulers  to  extend  their  power  in 
Europe  at  the  expense  of  other  ruling  families.  In  the  sixteenth 
century  the  chief  contestants  were  Spain  and  France.  Spain 
dropped  from  the  first  rank,  and  France  and  Austria  continued 
the  struggle  for  supremacy  through  the  seventeenth  and  eight- 
eenth centuries.  The  dynastic  wars  seem  to  the  student  of 
the  history  of  commerce  as  unfortunate  as  those  that  came 
from  religious  differences.  They  diverted  men  and  resources 
from  production  to  destruction;  they  checked  at  the  same  time 
commercial  development  and  the  reform  of  government. 

188.  Wars   occasioned   by   commercial   interests;   military 
aspect  of  commerce  in  this  period.  —  Still  another  class  of 
wars  can  be  distinguished  in  which  the  religious  or  dynastic 
motive  might  enter  to  some  extent,  but  in  which  the  com- 
mercial   motive    was    predominant.     The    reader    should    be 
cautioned  against  an  extravagant  idea  of  the  power  of  govern- 
ment to  extend  commerce.     At  the  present  time  this  power 
seems  very  slight  indeed.     It  was,  however,  far  greater  in  the 
period  under  consideration.     References  in  preceding  sections 
to  the  prevalence  of  piracy  and  to  the  warlike  attitude  of 
merchants  of  different  nations  toward  each  other  have  suggested 
the  military  character  of  commerce,  inviting  the  armed  protec- 
tion of  the  state.     "  One  fact  stands  out  clearly,"  says  a  recent 
authority  on  the  history  of  India,  "No  European  nation  has 


166  A   HISTORY  OF  COMMERCE 

won  the  supremacy  of  the  East  which  did  not  make  it  a  national 
concern."  The  prize  in  distant  commerce  went  not  to  the  best 
producers  and  merchants,  but  to  the  group  of  the  best  fighters; 
not  size  and  resources,  but  ability  to  organize  and  willingness 
to  risk  resources  in  conflict,  determined  the  question  of  success. 
The  little  state  of  Holland  made  her  fortune  by  an  eighty  years' 
war,  in  which  she  broke  the  power  of  the  Portuguese  and 
Spanish  in  the  East.  The  English  were  still  unready  to  em- 
bark their  national  resources  in  distant  ventures,  but  they 
won  their  position  in  continental  India  in  the  eighteenth  cen- 
tury by  military  support  which  the  French  kings  refused  their 
subjects. 

189.  Wars  arising  from  the  conflict  of  colonial  interests  in 
the  New  World.  —  Between  1600  and   1815  was  a  constant 
succession  of  wars,  arising  from  the  fact  that  five  European 
powers  had  colonies  in  the  New  World  which  they  were  seeking 
to  maintain  or  to  extend.     Holland  and  Portugal  lacked  the 
territorial  basis  to  maintain  their  struggle  when  larger  states 
armed  for  the  conflict;  France  and  Spain  found  their  best 
energies  absorbed  by  dynastic  interests  in  Europe  which  tied 
their   hands   abroad;   England   emerged    victorious   from  the 
conflict  and  found  herself  repaid,  by  a  position  of  commercial 
supremacy,  for  the  expense  to  which  she  had  been  put.     Out 
of  the  one  hundred  and  twenty-six  years  between  1688  and 
1815  she  had  spent  more  than  half,  sixty-four,  in  wars  ranging 
from  seven  to  twelve  years  in  length. 

190.  Political  importance  of  commerce  in  this  period,  con- 
nected with  the  desire  of  governments  for  ready  money.  — 
Commercial  expansion  in  this  period  depended,  as  said  above, 
on  the  political  power  of  the  home  country.     Did  not,  on  the 
other  hand,  the  political  power  of  the  state  depend  on  com- 
merce?    A  statesman  of  the  time  would  have  answered  this 
question  in  the  affirmative,  and  with  an  emphasis  which  would 
seem  strange  now.     We  think  nowadays  that  the  resources 
of  a  state  depend  upon  the  prosperity  of  the  people,  no  matter 
whether  this  prosperity  comes  from  agriculture  or  from  manu- 


_J 

WEST  INDIA 
ISLANDS 

S       ihSTANIOLA 


MODERN  STATE  AND  MERCANTILE  SYSTEM        167 

factures,  from  internal  trade  or  from  foreign  trade.  Statesmen, 
however,  of  the  period  under  discussion,  set  a  peculiarly  high 
value  on  foreign  commerce,  and  regarded  it  as  a  more  important 
branch  of  industry  than  any  other. 

The  chief  reason  for  this  view  lay  in  the  fact  that  most  of 
the  European  states  produced  little  or  none  of  the  precious 
metals,  and  could  get  them  only  by  trade  with  a  neighbor  or 
with  a  distant  country.  Now  money  is  "the  sinews  of  war," 
and  when  states  were  constantly  at  war  with  each  other,  a 
good  supply  of  money  seemed  to  the  statesman  a  matter  of 
the  first  necessity.  We  regard  money  nowadays  only  as  a 
means  of  procuring  other  forms  of  capital  by  exchange,  and 
do  not  worry  about  the  money  supply  so  long  as  capital  in 
other  forms  is  abundant.  It  may  have  been  the  fact,  however, 
that  in  the  early  period  of  the  modern  state  the  fiscal  and 
military  systems  operated  more  smoothly  when  the  stock  of 
money  in  the  country  was  abundant. 

191.  The  mercantile  system,  aiming  to  increase  the  stock 
of  ready  money  in  the  country.  —  Whether  rulers  were  justified 
or  not  in  the  anxiety  that  they  showed  about  the  money 
supply,  they  made  it  a  cardinal  point  in  their  policy  to  regu- 
late commerce  so  as  to  increase,  if  possible,  the  stock  of  the 
precious  metals  in  the  country.  They  argued  that  the  country 
would  make  money  if  it  sold  more  merchandise  to  foreigners 
than  it  bought  of  them,  for  then  the  foreigners  would  have  to 
make  up  the  balance  in  coin  or  bullion.  This  was  called  "a 
favorable  balance  of  trade,"  as  tending  to  bring  money  into 
the  country.  On  the  other  hand,  if  the  country  became  in- 
debted for  foreign  merchandise  to  an  amount  greater  than 
could  be  offset  by  the  exports,  the  country  would  owe  a  cash 
balance  abroad,  and  this  was  an  "unfavorable"  balance  of 
trade.  At  the  beginning  of  the  period  the  government  tried 
to  effect  its  object  simply  by  prohibiting  the  export  of  bullion 
(gold  and  silver);  this  was  the  "bullionist"  policy. 

Prohibitions  were  found  to  be  ineffective,  however,  and 
were  a  serious  hindrance  to  some  branches  of  commerce,  that 


168  A   HISTORY  OF  COMMERCE 

with  the  East  especially,  in  which  the  foreigners  demanded 
considerable  supplies  of  the  precious  metals.  The  export  of 
bullion,  therefore,  was  generally  permitted,  and  the  govern- 
ment contented  itself  with  a  regulation  of  the  commerce  in 
merchandise  which,  it  hoped,  would  bring  more  bullion  into 
the  country  than  was  carried  out.  • 

192.  Features  of  the  mercantile  system;  restriction  of  im- 
ports. —  If  the  student  will  remember  that  the  main  object 
of  the  mercantile  system,  as  it  was  expressed  in  the  com- 
mercial policy  of  the  seventeenth  and  eighteenth  centuries, 
was  to  increase  the  credits  in  a  country's  foreign  trade,  and 
diminish  the  debits,  so  as  to  get  a  balance  in  cash,  the  main 
features  of  the  policy  will  be  easily  intelligible. 

In  the  first  place,  imports  were  discouraged.  A  Spanish 
mercantilist  thought  that  his  country  suffered  "an  infinite 
wrong"  from  the  importation  of  fish  from  abroad,  which,  by 
his  reckoning,  cost  the  country  three  million  piasters  a  year; 
he  suggested  either  that  home  fisheries  should  be  built  up  so 
that  the  money  need  not  leave  the  country,  or  that  permission 
be  obtained  from  the  Pope  to  eat  meat  on  Saturdays,  which 
would  diminish  the  necessity  for  importation.  A  typical 
example  of  the  ideas  underlying  the  policy  is  furnished  by  an 
appeal  of  the  English  salt-makers  in  the  seventeenth  century, 
urging  that  the  use  of  foreign  salt  in  the  curing  of  fish  be 
prohibited  on  the  ground  that  it  was  the  "  wisdom  of  a  kingdom 
or  nation  to  prevent  the  importation  of  any  manufacture  from 
abroad  which  might  be  a  detriment  to  their  own  at  home,  for 
if  the  coin  of  the  nation  be  carried  out  to  pay  for  foreign  manu- 
factures and  our  own  people  left  unemployed,  then  in  case  a 
war  happen  with  our  potent  neighbours,  the  people  are  inca- 
pacitated to  pay  taxes  for  the  support  of  the  same." 

Mercantilism  and  modern  protectionism  easily  ran  together, 
AS  is  apparent  in  the  quotation,  but  the  spirit  animating 
restrictions  was  in  this  period  mainly  mercantilist,  based,  that 
is,  on  consideration  of  the  flow  of  precious  metals.  The 
methods  of  tariff  regulation,  moreover,  differed  from  those  of 


MODERN  STATE  AND  MERCANTILE  SYSTEM        169 

modern  protectionism;  statesmen  did  not,  in  most  cases, 
attempt  to  scale  the  duties  so  as  just  to  balance  the  advantages 
of  the  foreign  producer,  but  resorted  to  downright  prohibition 
of  the  wares  which  they  desired  to  exclude  from  the  home 
market. 

193.  Encouragement  of  exports,  manufactures,  and  shipping. 
-  In  the  second   place,   exports   were  encouraged,   for  they 

represented  the  credit  items  in  a  country's  trade,  and  might 
bring  home  a  balance  in  cash.  Even  imports  could  be  tolerated 
if  they  led  to  a  more  than  corresponding  increase  in  exports. 
The  trade  with  East  India  was  looked  on  with  suspicion  for 
some  time  because,  as  said  above,  it  required  the  export  of 
considerable  bullion;  but  finally  it  established  itself  in  public 
esteem,  on  the  ground  that  a  large  part  of  the  eastern  wares 
was  transshipped  in  England  and  exported  to  other  European 
countries,  so  that  the  bullion  was  recovered  from  them.  Alto- 
gether the  best  kind  of  imports,  however,  was  held  to  be  the 
raw  materials  of  manufacture;  if  these  could  be  worked  up  in 
England  and  exported,  the  country  cleared  not  only  the  sum 
originally  due  for  the  imported  material,  but  also  the  extra 
charge  for  the  manufacture.  Home  industries  were  given 
various  privileges  by  the  government,  because  they  either 
spared  the  importation  or  increased  the  exportation  of  the 
wrares  which  they  produced. 

Shipping  and  the  fisheries  were  regarded  with  special  favor, 
not  only  because  they  helped  to  produce  a  favorable  balance 
of  trade,  but  also  because  they  were  feeders  for  the  national 
navy,  and  thus  augmented  the  strength  of  the  country  in  war. 

194.  Failure  of  the  mercantile  system  to  affect  the  distribu- 
tion of  the  precious  metals.  —  Such  were,  in  brief,  the  charac- 
teristics of  commercial  policy  in  the  time  of  the  mercantile 
system.     The  word   "system"   may  give  a  false  impression, 
for  though  the   main   ideas   of  mercantilism  were  generally 
accepted  during  the  seventeenth  and  eighteenth  centuries,  they 
were  greatly  modified  in  their  practical  application,  and  were 
seldom   carried    to   their   logical    conclusions.     For   example, 


170  A  HISTORY  OF  COMMERCE 

though  statesmen  professed  a  desire  to  stimulate  exports,  yet 
export  duties  were  generally  retained  in  this  period  for  the 
revenue  that  they  returned,  and  they  hurt  in  some  cases, 
without  question,  the  sale  of  wares  abroad. 

After  this  review  of  the  characteristics  of  commercial  policy 
the  reader  will  naturally  inquire  what  were  its  effects.  On 
one  point  an  answer  can  be  given  with  considerable  assurance; 
the  policy  had  no  important  effect  on  the  distribution  of  the 
precious  metals.  Gold  and  silver  were  brought  from  America, 
the  chief  source  of  supply,  to  Spain,  and  flowed  from  Spain  to 
the  countries  where  they  were  needed  in  business;  it  seemed  as 
though  all  the  people  of  the  world  were  in  an  unconsicous 
conspiracy  to  defeat  the  plans  of  statesmen  for  checking  or 
directing  the  flow.  It  is  noteworthy  that  Spain,  the  country 
which  had  the  best  chance  apparently  to  accumulate  treasure 
and  which  pursued  a  policy  of  exaggerated  mercantilism,  was 
always  complaining  of  the  dearth  of  gold  and  silver,  while 
Oriental  states,  which  had  never  heard  of  mercantilism,  accu- 
mulated large  stores  of  bullion.  The  attempts  of  European 
countries  to  rob  other  countries  of  their  treasure  by  legislation 
present,  from  one  point  of  view,  an  absurd  spectacle,  for  they 
were  all  applying  the  same  principles  in  much  the  same  way, 
action  and  reaction  were  equal,  and  no  amount  of  political 
straining  affected  the  distribution  due  to  economic  demand. 

196.  Important  effects  of  the  mercantile  system  in  other 
ways.  —  The  commercial  policy  of  the  mercantilist  period  had 
effects  in  other  directions,  if  it  did  miss  the  mark  at  which  it 
aimed.  It  was  important,  considered  merely  as  a  policy  of 
restriction,  in  checking  the  exchange  of  commodities  between 
states.  Just  as  manors  and  the  districts  centering  around  a 
city  had  aimed  at  self-sufficiency  in  an  earlier  period,  so  the 
states  of  this  period  were  led  by  their  dislike  of  imports  to 
attempt  the  production  of  everything  possible  within  their 
borders;  and  an  international  organization,  in  which  each  state 
would  specialize  in  the  products  for  which  it  was  best  fitted, 
and  would  depend  on  commerce  with  others  for  supplying 


MODERN  STATE  AND  MERCANTILE  SYSTEM        171 

deficiencies,  was  hindered  from  developing.  The  mercantile 
system  furnished  a  natural  basis  for  the  system  of  national 
protection,  which  grew  up  from  it,  and  which  has  not  entirely 
outgrown  even  yet  its  mercantilist  origins.  One  of  the  most 
obvious  effects  of  mercantilist  commercial  policy  can  be  traced 
in  its  influence  on  the  foreign  relations  of  states.  It  was  not, 
as  is  often  said,  the  chief  cause  of  the  many  wars  which  vexed 
Europe  at  this  period;  their  cause  lay  deeper  than  any  theory 
of  favorable  or  unfavorable  balances  of  trade.  The  balance  of 
trade  theory  did,  however,  affect  the  political  grouping  of 
countries  to  a  considerable  extent,  and  inclined  statesmen  to 
look  for  friends  or  foes  in  the  countries  with  which  the  balance 
was  favorable  or  unfavorable.  England,  for  example,  made 
herself  the  ally  of  Portugal  through  a  large  part  of  the  modern 
period,  because  Portugal  bought  her  manufactures,  and  sold 
in  return  wines  and  other  commodities  which  could  not  be 
produced  at  home;  and  England  kept  alive  the  traditional 
hostility  toward  France  because  the  trade  with  that  country 
showed  regularly  an  unfavorable  balance. 

196.  Colonial  policy.  —  Based  on  considerations  like  the 
preceding,  the  colonial  policy  of  this  period  was  marked  by 
restrictions  entirely  opposed  to  modern  ideas  of  commercial 
freedom.  A  government  which  permitted  or  encouraged  the 
establishment  of  colonies  in  distant  lands,  considered  it  a  duty 
to  itself  to  see  that  other  governments  or  the  colonists  them- 
selves did  not  rob  it  of  the  rewards  of  success.  The  colonial 
policy  of  the  period  has  sometimes  been  pictured  as  purely 
one-sided,  selfishly  sacrificing  the  colonists  to  the  interests  of 
the  people  at  home.  This  view  leaves  out  of  account  not  only 
the  generous  help  given  by  European  governments  to  their 
dependencies,  but  also  a  great  mass  of  legislation  aiming  to 
benefit  the  colonists  by  assuring  them  a  market  in  the  home 
country,  and  imposing  sometimes  serious  restrictions  on  the 
inhabitants  there.  A  government  did  no  more  than  hold  reso- 
lutely to  the  idea  that  emigrants,  wherever  they  might  be, 
were  still  citizens  of  their  native  state  and  bound  to  help 


172  A  HISTORY  OF  COMMERCE 

maintain  its  power.  The  government  tried  ordinarily  to  frame 
its  regulations  so  that  mother  country  and  dependency  would 
devote  themselves  to  different  lines  of  production,  and  so 
supplement  rather  than  compete  with  each  other.  It  con- 
sidered it  only  natural  and  proper  that  the  colony  should  trade 
mainly  or  entirely  with  the  mother  country.  As  said  above, 
this  was  a  period  of  bitter  conflict  among  the  European  states, 
and  a  country's  commerce  was  thought  to  be  one  of  the  main- 
stays of  its  military  and  naval  power;  it  seemed,  therefore,  to 
be  the  plain  duty  of  colonists  to  contribute  by  their  commerce 
to  the  resources  on  which  the  independent  existence  of  the 
whole  nation  was  thought  to  depend. 


QUESTIONS  AND  TOPICS 

The  student  will  do  best,  probably,  to  study  carefully  one  of  the 
references  to  manuals  in  the  bibliography  as  a  means  to  an  understanding 
of  the  topics  of  this  chapter. 

1.  An   exercise    requiring   considerable    time,    and    supposing   some 
acquaintance  with  narrative  history,  but  promising  valuable  results,  is 
the   following.     Select   one   of  the   European   states :   England,  France, 
Spain,   the   Netherlands.     Make   a   chronological   summary   of   its  wars 
during  the  period  1500-1789,  classifying  the  wars  under  one  of  the  heads 
suggested,  and  aiming  to  get  the  total  years  spent  in  each  kind  of  war  and 
at  peace.     Estimate  the  gains  and  losses  by  war,  and  so  reach  a  position 
to  judge  of  the  merits  of  the  policy  pursued. 

2.  Sections  181-2  cover,  to  some  extent,  the   ground  of  chap.  15. 
Review  that  chapter,  and,  if  possible,  review  the  history  of  some  state  like 
France,  to  appreciate  the  significance  of  the  political  development.  [Adams, 
French  nation.] 

3.  Make  a  written  summary  of  the  hindrances  to  commerce  in  France 
at  the  end  of  this  period.     [Taine,  The  ancient  regime,  N.  Y.,  Holt,  1876,, 
$2.50;  Edward  J.  Lowell,  The  eve  of  the  French  Revolution,  Boston, 
Houghton,  1900,  $2.] 

4.  Thomas  Mun,  an  Englishman  who  lived  in  the  seventeenth  cen- 
tury, wrote  that  the  regular  means  "to  encrease  our  wealth  and  treasure 
is  by  Forraign  Trade,  wherein  wee  must  ever  observe  this  rule;  to  sell  more 
to  strangers  yearly  than  wee  consume  of  theirs  in  value."     State  the  argu- 
ments by  which  Mun  would  support  this  proposition,  and  determine  your 
own  opinion  on  the  question. 


MODERN  STATE  AND  MERCANTILE  SYSTEM        173 

5.  Make  a  brief  written  statement  of  the  difference  between  mer- 
cantilism and  protectionism. 

6.  Define  the  attitude  which  the  mercantilist  would  assume  toward 
each  of  the  following  trade  phenomena :  import  of  raw  silk,  export  of  silver 
plate,  export  of  silk  goods,  import  of  knives,  import  of  gold  bullion,  im- 
port of  salt  fish. 

7.  Study,  in  a  book  on  economics,  the  influences  determining  the  dis- 
tribution of  the  precious  metals,  and  show  how  mercantilism  was  bound 
to  fail  in  its  object  of  increasing  the  money  in  circulation  in  a  given  coun- 
try.    [For  a  brief  and  clear  discussion  see  F.  A.  Walker,  Pol.  econ.,  ad- 
vanced, N.  Y.,  Holt,  sects.  176-178.] 

8.  Discover,  in  the  writings  and  speeches  of  American  protectionists, 
evidence  of  mercantilist  views.     [See,  for  example,  Roberts,  Government 
revenue,  Boston,  1884,  or  R.  W.  Thompson,  History  of  protective  tariff 
laws,  Chicago,  1888.] 

9.  Criticism  of  the  old  colonial  policy.     [Adam  Smith,  Wealth  of 
nations,  Book  4,  chap.  7,  part  2,  reprinted  in  Rand,  EC.  hist.,  chap.  1.] 

BIBILOGRAPHY 

A  bibliography,  unfortunately  ill  suited  to  the  purposes  of  untrained 
students,  is  appended  to  chap.  22  of  Cambridge  mod.  hist.,  vol.  3.  Set. 
also  the  histories  of  economics  by  Cossa  and  Ingram,  under  mercantilism. 

Of  general  discussions  the  student  must  choose  between  the  chapter 
noted  above,  J.  N.  Figgis,  Political  thought  in  the  sixteenth  century, 
which  is  abstruse  and  theoretical,  or  Cheyney,  Eur.  background,  chap.  6, 
Political  institutions  of  Central  Europe,  1400-1650,  which  is  concrete  and 
descriptive;  neither  is  satisfactory  for  our  purposes.  Probably  the  most 
intelligible  discussion  will  be  found  to  be  Seeley's  **  Expansion  of  Eng- 
land, especially  lecture  4,  the  old  colonial  system;  and  lecture  6.  commerce 
and  war.  Schmoller,  **  The  mercantile  system,  deserves  its  place  as  an 
economic  classic,  but  will  be  found  difficult  by  beginners.  A  brief  account 
of  mercantilism,  by  Ingram,  will  be  found  in  the  Encyc.  Brit.,  9th  ed., 
19:  354-358. 

Among  the  smaller  manuals  can  be  recommended:  Cunningham  and 
McArthur,  chap.  4;  Warner,  chap.  9.  Thomas  Mun,  England's  treasure 
by  forraign  trade,  N.  Y.,  Macmillan,  1895,  $.75,  presents  mercantilist 
views  in  their  typical  form,  and  is  an  excellent  source  for  somewhat  ad- 
vanced students;  chapters  may  be  assigned  for  discussion  and  criticism. 


CHAPTER  XIX 
SPAIN  AND  PORTUGAL 

197.  Extent  and  power  of  the  Spanish  monarchy.  —  Pur- 
suing now  the  history  of  modern  commerce  by  studying  its 
development  in  different  countries,  we  turn  first  to  the  states 
of  the  Iberian  peninsula,  whose  great  possessions  outside  of 
Europe  seemed  to  assure  their  commercial  supremacy. 

Shortly  before  the  close  of  the  last  century  of  the  Middle 
Ages  three  events  of  great  significance  occurred  in  Spanish 
history.  One  was  the  union  of  the  crowns  of  Castile  and 
Aragon,  which  brought  the  greater  part  of  the  Iberian  penin- 
sula under  one  ruler.  The  second  was  the  completion  of  the 
centuries  old  war  against  the  Moors,  by  the  conquest  of  their 
last  stronghold  in  Granada.  The  third  was  the  discovery  of 
America  by  Columbus.  The  great  Spanish  king  of  the  six- 
teenth century,  Charles  V,  was  the  most  powerful  sovereign  in 
the  world.  He  governed  at  home  with  undisputed  absolutism; 
he  was  ruler  by  one  title  or  another  of  some  of  the  richest 
European  countries  outside  of  Spain  (especially  the  Nether- 
lands); and  he  enjoyed  in  his  own  right  the  sovereignty  not 
only  over  the  greater  part  of  America,  but  over  Asiatic  and 
African  possessions  as  well. 

198.  Rapid  development  of  Spanish  industry  and  commerce. 
—  The  rise  to  greatness  of  the  Spanish  kings  was  paralleled  by 
the  development  of  the  Spanish  industrial  organization.     Spain 
tad  throughout  the  Middle  Ages  been  rich  only  in  her  raw 
materials;  she  had  exported  wool,  iron,  and  wine,  and  had 
imported  all  her  manufactures,  largely  in  foreign  ships.     The 
long  wars  against  the  Moors  had  turned  people  from  the  in- 
dustrial arts,  so  that  manufactures  were  primitive  except  in  a 

174 


SPAIN  AND  PORTUGAL 


175 


80°  60°  40"  20° 


20°  40°  »0° 


THE 

SPANISH 
MONARCHY 


LongHud<     80°      Wen        60°      from       40  'Onwnirlch  20 


0'  Lonjltud«   20°      Ewt        40°      from       60°  Grwnwlcb 


The  map  shows  approximately  the  extent  of  the  Spanish  possessions  under  Philip  II, 

(1556-1598). 


176  A   HISTORY  OF  COMMERCE 

few  cities  like  Barcelona.  The  most  advanced  classes  in  man- 
ufactures and  trade  were  not  the  native  Christians  but  Moors 
or  Jews.  A  decided  advance  can  be  noted  under  Ferdinand 
and  Isabella,  but  the  movement  did  not  gain  full  headway 
till  the  sixteenth  century.  Then,  it  is  said,  the  laborers  em- 
ployed in  the  textile  industries  of  Toledo  rose  from  10,000  to 
50,000  in  about  twenty-five  years,  and  still  merchants  could 
not  supply  the  demand  and  had  orders  for  five  or  even  ten 
years  ahead.  The  industries  based  on  wool,  it  is  said,  grew 
till  they  supported  nearly  a  third  of  the  population;  Spain 
began  to  import  raw  silk  and  export  the  finished  product,  a 
reversal  of  previous  conditions;  great  factories  were  established 
to  make  soap  and  other  wares;  and  the  amount  of  business 
transacted  in  Spain  made  the  fairs  of  Medina  del  Campo  one 
of  the  important  clearing  houses  of  Europe.  Over  100  ships 
measuring  from  300  to  500  tons  left  Spain  yearly  for  the  colo- 
nies, and  at  least  as  many  cleared  for  European  ports;  50  ships 
or  more,  it  is  said,  often  left  the  harbor  of  Santa  Maria  together, 
carrying  away  the  salt  that  was  manufactured  there. 

199.  Economic  decline  in  the  following  period.  —  Astonish- 
ing as  is  this  rapid  economic  development,  it  is  less  striking 
than  the  economic  decline  that  followed.  Lack  of  space  forbids 
the  discussion  in  detail  of  the  complex  causes  which  brought 
about,  first,  an  actual  decline  of  productive  power,  and  then 
a  condition  so  nearly  stationary  that  Spain  was  passed  by 
nearly  all  the  other  states  of  western  Europe.  One  important 
factor,  the  colonial  system  of  the  Spanish  kings,  will  be  reserved 
for  discussion  later  as  a  separate  topic.  In  this  place  we  shall 
take  up  some  of  the  significant  facts  showing  the  decline,  and 
suggest  some  influences  that  make  it  intelligible. 

The  most  serious  symptom  of  decadence  was  an  actual 
decrease  of  population.  In  1723  the  total  population  of  Spain 
was  under  six  million,  three  million  less  than  the  figures 
show  for  1594,  when  the  decline  had  probably  already  begun. 
This  decrease  is  the  more  significant  in  that  it  affected  largely 
the  urban  groups  whose  numbers  reflect  the  prosperity  or 


SPAIN  AND  PORTUGAL  177 

reverses  of  industry  and  trade;  large  cities  lost  half  or  even 
three  quarters  of  their  population  in  half  a  century.  Before 
the  middle  of  the  seventeenth  century  the  wool  manufacture 
consisted  only  of  a  few  unimportant  factories  of  coarse  ma- 
terials; the  silk  tax  of  Granada  brought  in  less  than  a  quarter 
of  what  it  had  yielded  under  Charles  V;  and  Spain  had  to 
rely  on  other  countries  to  furnish  the  manufactured  wares  for 
export  to  her  colonies.  The  decline  affected  not  only  the 
quantity  of  the  population,  but,  to  all  appearances,  its  quality 
as  well;  beggary  and  vagrancy  became  a  national  curse. 

200.  Causes  of  decline ;  faulty  political  organization.  —  The 
decline  in  population  cannot  be  explained  by  emigrations  to 
America,  for  the  drain  from  that  source  was  small,  as  will  be 
shown  later.  Executions  by  the  Inquisition,  numerous  as  they 
were,  could  not  alone  have  checked  the  population.  More 
serious  was  the  expulsion,  under  ecclesiastical  influences,  of 
the  Moriscoes  of  the  South,  numbering  perhaps  a  million. 
These  people  of  Moorish  blood,  the  leaders  in  the  agriculture 
and  industry  of  Spain,  in  1609  followed  into  exile  the  Jews  who 
had  been  the  leaders  in  trade;  the  native  Spanish  were  unfit 
to  fill  the  gaps  thus  made  in  the  industrial  ranks. 

Deeper-lying  causes  were  at  work,  however.  The  damage 
from  any  single  event  could  have  been  repaired  if  there  had 
been  wholesome  vigor  in  the  Spanish  political  organization,  as 
there  was  and  as  there  is  still  among  the  Spaniards  as  a  people. 
It  was  the  fortune  of  Spain,  at  this  critical  period  of  her  history, 
to  have  the  control  of  affairs  vested  in  the  hands  of  rulers 
who  were  negligent  of  her  condition,  by  the  distraction  of 
their  interests  or  by  natural  incompetence,  and  who  wasted 
her  resources.  The  framework  of  government  offered  no  chance 
for  good  councils  to  reach  the  monarch's  ears.  Men  of  business 
sense  were  excluded  from  office  even  in  the  towns,  so  far  as 
possible,  and  were  a  rarity  in  the  national  parliament;  power 
lay  in  the  hands  of  lay  and  ecclesiastical  lords  who  had  in- 
herited feudal  ideas,  the  reverse  of  business-like,  from  the 
earlier  period  of  the  crusade  against  the  Moors,  and  who  had 


178  A   HISTORY  OF  COMMERCE 

no  understanding  of  the  measures  needed  for  industrial  devel- 
opment. There  can  be  little  doubt  that  the  prime  evil  from 
which  Spain  suffered  was  (as  it  still  is)  bad  government. 

201.  The  burden  of  taxes.  —  The  chief  political  abuse  ap- 
peared in  the  form  of  taxes  so  burdensome  in  their  amount 
and  in  the  method  of  collection  that  industry  was  stifled. 
Taxes  increased  so  rapidly  in  the  sixteenth  century  that  in 
1594  it  was  asserted  that  they  amounted  to  30  per  cent  on  a 
man's  property,  and  that  farmers  could  not  exist  no  matter 
how  small  a  rent  they  paid;  they  left  Spain  or  went  to  prison. 
The  "alcabala,"  a  tax  supposed  to  be  10  per  cent  on  a  ware 
every  time  it  was  bought  and  sold,  was  raised  until  it  absorbed 
most  of  the  profits  of  trade  and  was  a  leading  factor  in  the 
decline  of  industry.     A  Spanish  author  of  the  eighteenth  cen- 
tury (Ulloa)  shows  that  a  man  engaged  in  the  manufacture 
of  a  certain  stuff  would  have  had  to  pay  in  taxes  actually  more 
than  he  earned;  "hence  it  follows  that  he  would  have  gained 
more  by  making  nothing,  and  in  Spain  it  is  profitable  not  to 
work."     Some  industries,  more  fortunate,  paid  60  per  cent  or 
40  per  cent  of  the  value  of  the  goods  as  a  tax  to  the  govern- 
ment. 

202.  Customs  duties,  on  the  frontier  and  inside  the  country. 
—  The  same  ruinous  excesses  marked  the  policy  in  customs 
duties.     The  government  established  rates  which  were  for  the 
time  enormously  high,  or  absolute  prohibitions  with  the  death 
penalty  for  infraction.     Commerce  would  have  ceased  almost 
altogether  if  it  had  not  been  for  the  absolute  need  of  foreign 
wares  in  Spain  after  the  destruction  of  home  manufactures. 
The  wares  were  procured  partly  by  smugglers  through  the 
corruption  of  the  customs  guards,  partly  by  the  connivance  of 
the  government,  which  allowed  foreigners  such  favors  in  meas- 
urement and  valuation  that  often  not  over  a  quarter  of  the 
nominal  duty  was  paid.     This  allowed  wares  to  enter,  but  it 
killed  the  remnants  of  active  Spanish  commerce  with  Europe, 
for  the  favors  granted  to  foreigners  were  refused  to  natives. 
Other  measures  almost  as  monstrous  were  attempted,  and 


SPAIN  AND  PORTUGAL  179 

failed  only  because  the  government  lacked  power  to  enforce 
them.  Spanish  shipping  declined  until  it  practically  ceased 
to  exist  outside  the  protected  colonial  traffic. 

Finally,  to  complete  this  picture  of  the  difficulties  under 
which  commerce  labored  in  Spain,  duties  existed  not  only  or! 
the  frontiers  but  in  the  interior  of  the  country,  hindering  the 
free  passage  of  goods  and  the  development  of  resources. 
Spanish  kings  made  attempts  to  abolish  the  internal  customs 
frontiers,  which  failed  through  the  opposition  of  interested 
persons  and  the  royal  need  for  money.  It  was  not  until  1717 
that  the  internal  duties  were  done  away  with,  and  even  then 
the  remedy  was  insufficient,  and  Andalusia  kept  its  internal 
tariff  barriers. 

203.  Examples  of  bad  policy ;  the  Mesta.  —  An  excellent 
example  of  the  evils  of  the  government's  economic  policy  is 
furnished  by  the  history  of  the  Mesta,  an  association  of  stock 
raisers  largely  devoted  to  the  production  of  merino  wool.     The 
flocks  grazed  in  summer  on  the  highlands  of  Leon,  and  de- 
scended   in    winter   to    Estremadura.     The   Mesta   got    such 
privileges  that  it  killed  the  agriculture  within  its  reach.     Where 
the  sheep  had  once  fed  the  land  could  never  be  alienated  for 
another  purpose;  no  one  could  bid  against  the  Mesta  for  the 
lease  of  pastures;   proprietors  along  the  route  of  the  sheep 
must  sit  passive  and  see  the  crops  destroyed  by  them.     Estre- 
madura, once  one  of  the  richest  provinces  of  Spain,  became 
one  of  the  poorest,  and  parts  of  it  now  are  nearly  desert.     The 
policy  of    favoring    one    interest,   by   sacrificing  to  it  other 
interests  more  important,  was  characteristic  of  the  diseased 
political  condition  of  Spain;  and  the  wasting  of  national  re- 
sources shown  in  the  case  of  the  Mesta  was  but  one  of  many 
examples  of  neglect.     The  canals  and  aqueducts  of  the  irriga- 
tion system,  on  which  the  Moors  had  lavished  their  care,  were 
allowed  to  deteriorate  and  go  out  of  use;  and  the  forests  were  cut 
down  to  the  permanent  detriment  of  the  soil  and  water  supply. 

204.  Failure  to  develop  colonial  trade.  —  In  the  foregoing 
sketch  we  find  sufficient  explanation  of  the  decline  of  the 


180  A   HISTORY  OF  COMMERCE 

domestic  industry  and  commerce  of  Spain;  we  have  still  left 
to  consider  the  question  why  the  evils  of  the  home  system 
were  not  repaired  by  the  chances  for  commercial  development 
which  the  discovery  of  America  and  of  the  sea  route  to  eastern 
possessions  opened.  Before  the  attention  of  Spanish  rulers 
was  absorbed  by  the  attempt  to  suppress  the  Protestant  move- 
ment in  Europe  and  to  subject  the  Netherlands,  the  crown 
had  won  an  immense  area  outside  of  Europe;  even  to-day  the 
extent  of  the  Spanish  possessions  at  this  period  is  attested  by 
the  hold  which  the  Spanish  language  still  has  on  the  world. 
Of  all  the  European  countries  Spain  was  the  one  which  ap- 
peared in  the  sixteenth  century  to  have  the  best  chance  to 
build  up  a  great  commercial  empire  based  on  world-wide  pos- 
sessions. Why  was  not  this  chance  accepted? 

206.  Spanish  colonial  policy.  Taxes.  —  It  was  a  misfortune 
for  the  Spaniards  that  they  quickly  discovered  precious  metals 
in  America,  and  in  seeking  to  increase  their  supply  were  diverted 
from  a  more  substantial  basis  of  prosperity.  But  the  final 
blame  for  failure  lies  again  not  with  the  people  nor  with  the 
nature  of  the  colonies,  but  with  the  government.  The  expla- 
nation is  to  be  sought  in  the  colonial  policy  of  the  Spanish 
kings.  At  first  the  trade  to  America  was  comparatively  unre- 
stricted. Before,  however,  merchants  could  establish  the  trade 
relations  which  would  have  enabled  them  to  develop  the 
resources  both  of  Spain  and  the  transmarine  possessions,  the 
government  laid  its  heavy  hand  on  the  trade  and  held  it  down 
so  tightly  that  it  never  acquired  vigor.  Heavy  taxes  were 
levied  on  trade,  and,  as  in  the  case  of  taxes  at  home,  these 
often  were  framed  in  such  a  short-sighted  way  that  they 
brought  far  more  loss  to  commerce  than  gain  to  the  treasury. 
The  "  palmeo,"  for  instance,  was  an  export  duty  levied  in  the 
eighteenth  century  on  wares  merely  according  to  their  bulk, 
without  regard  to  their  value;  its  effect  was  to  encourage  the 
export  of  foreign  manufactures,  which  had  great  value  in  a 
small  bulk  so  that  they  could  afford  to  pay  the  duty,  while 
the  coarser  Spanish  exports  were  taxed  out  of  existence. 


SPAIN  AND  PORTUGAL  181 

206.  Restriction  of  trade  to  appointed  fleets.  —  Ships  could 
not  sail  to  America  as  might  suit  the  convenience  of  mer- 
chants, but  had  to  sail  from  a  given  port   (Seville  or  Cadiz), 
at  a  given  time,  to  a  given  port  in  America  (Porto  Bello  near 
the  modern  Colon,  or  Vera  Cruz).     The  government   by  this 
restriction  made  it  easier  to  protect  the  ships  at  sea,  and  to 
collect  taxes  from  their  cargoes,  but  it  bound  the  arms  of 
merchants  so  fast  with  its  official  red  tape  that  they  were 
weak  and  helpless.     In  theory  two  fleets  left  Spain  each  year, 
one  for  Central  America  and  one  for  South  America;  in  fact 
there  were  years  together,  especially  in  the  eighteenth  century, 
when  fleets  did  not  sail,  and  when  the  colonial  possessions 
might   have   been   entirely   non-existent   so   far  as   regarded 
benefit  to  the  mother-country. 

207.  Restriction  of  the  market  by  the  discouragement  of 
emigration.  —  On  arrival  in  America  a  cargo  was  sold  some- 
times for  a  tremendous  advance  over  cost.     Sometimes,  how- 
ever, and  more  and  more  frequently  as  time  went  on,  a  fleet 
would  find  on  arrival  that  there  was  no  market  for  its  goods, 
and  they  would  be  sacrificed  or  brought  back  to  Spain  unsold. 
A  special  reason  for  this  will  appear  later,  when  we  refer  to 
the  growth  of  smuggling.     One  general  cause,  however,  for 
the  weakness  of  Spanish  colonial  commerce  must  be  noticed 
in  this  place.     In  contrast  to  the  English,  who  stimulated 
emigration  and  so  built  up  a  market  for  their  wares  in  the 
colonies,  the  Spanish  kings  kept  emigration  under  a  system  of 
regulation  which  was  almost  inconceivably  strict.     Colonists 
were  discouraged  from  settling  in  the  New  World  not  only  by 
the  difficulty  of  getting  permission  to  go  out,  but  also  by  the 
poor  chances  for  making  a  living  when  they  arrived.     They, 
were  strictly  forbidden  to  engage  in  any  industry  which  could 
threaten  to  compete  with  a  Spanish  industry;  they  were  tied 
down  to  residence  in  some  particular  province;  and  they  were 
prevented    from   developing    the    resources    about    them    by 
restrictions  which  applied  not  only  to  trade  with  the  mother- 
country   but    also   to    intercolonial    trade.     Trade    with    the 


182  A  HISTORY  OF  COMMERCE 

Philippines,  for  instance,  was  closely  restricted  or  even  pro~ 
hibited.  Districts  in  the  southern  part  of  South  America  were 
subject  to  similar  burdensome  restrictions.  A  settler  on  the 
La  Plata  might  have  to  get  his  European  wares  by  a  trip  across 
the  Continent  to  Lima,  then  up  the  west  coast,  and  across  the 
isthmus  to  Porto  Bello.  When  the  privilege  of  receiving  two 
ships  a  year  was  granted  to  Buenos  Ayres  a  customs  frontier 
was  established  in  the  interior  to  prevent  goods  from  reaching 
Peru  by  this  route. 

208.  Supply  of  the  market  by  smugglers.  —  Spanish  colo- 
nists increased  but  slowly,  therefore,  in  numbers  and  riches, 
and  furnished  a  poor  market  for  Spanish  exports.     The  Indians 
were  even  worse  customers.     Natives  who  went  barefoot  and 
had  no  beards  were  forced,  it  is  said,  to  buy  razors  and  silk 
stockings  at   exorbitant   prices,   but   of  course  they  had   no 
natural  desire  for  those  or  other  European  wares,  and  took 
only  an  inconsiderable  amount.     As  the  home  manufactures 
declined   in   vigor,   exports  to  the  colonies   came  to  consist 
almost  entirely  of  the  wares  from  other  European  countries, 
and  even  these  were  obtained  mainly  through  smugglers.     The 
government  could  maintain  its  regulations  against  Spaniards, 
but  not  against  foreigners,  who  absorbed  the  most  profitable 
parts  of  the  trade,  and  spoiled  the  market  for  merchants  who 
obeyed  the  restrictions.   The  English  and  Dutch  islands  became 
the  stations  for  an  illicit  trade  which  flourished  as  the  regular 
trade  declined.     After  1713  England  had  the  right,  by  treaty, 
to  the  monopoly  of  the  African  slave  trade  with  the  Spanish 
possessions,  and  was  privileged  to  send  out  nearly  five  thousand 
negroes  a  year.     The  English  had  moreover  the  right  to  send 

.out  one  trading  ship  of  500  tons;  they  secretly  enlarged  the 
capacity  of  the  ship  and  used  accompanying  transports  to  carry 
still  more  cargo. 

209.  Wares  of  the  colonial  trade.  —  Of  the  products  which 
Spanish  America  furnished  to  commerce  silver  continued  the 
most  important  during  the  colonial  period;  the  list  of  a  ship's 
cargo  begins  always  with  an  enumeration  of  the  "plate,"  in 


SPAIN  AND  PORTUGAL  183 

bullion  and  coin,  of  which  but  a  small  part  was  gold.  A  fleet 
which  left  America  in  1582  comprised  37  ships,  "and  in  every 
one  of  them  there  was  as  good  as  thirty  pipes  of  silver  one 
with  another,  besides  great  store  of  gold,  cochinilla,  sugars, 
hides,  and  Cana  Fistula  (arrow-root?)  with  other  apothecary 
drugs."  Descriptions  of  cargoes  in  the  eighteenth  century  are 
substantially  similar;  among  additional  wares  enumerated  we 
find  indigo,  cocoa,  vanilla,  sarsaparilla, "  Jesuit's  bark,"  (quinine) 
"Paraguay  tea"  (mate),  etc.  The  chief  export  from  the  La 
Plata  region  was  hides,  of  which  two  ships  brought  nearly 
40,000  in  1723.  Most  agricultural  products  were  too  bulky  to 
pay  for  transportation. 

The  Spanish  exported  to  the  colonies  assorted  cargoes;  one 
of  1625  included  "Wines,  Figs,  Raisins,  Olives,  Oyle,  Cloth, 
Cursies  (kerseys,  light  woolens  named  from  an  English  town), 
Linnen,  Iron  and  Quicksilver  for  the  mines." 

210.  Reform  of  the  colonial  system  about  1750.  —  In  the 
eighteenth  century  the  old  Spanish  colonial  system  went  to 
pieces.  The  government  recognized  at  last  that  it  could  not 
execute  the  laws  which  it  had  made,  and  that  the  system 
which  was  meant  to  form  the  basis  of  a  great  empire  resulted 
only  in  stifling  Spanish  commerce  and  in  encouraging  foreigners 
to  great  illegal  gains.  Foreigners  were  still  excluded  in  theory; 
the  importance  of  the  change  lay  in  the  opening  of  the  trade 
to  the  Spanish  who  had  before  been  excluded  by  restrictions 
and  taxes.  Spanish  merchants  were  allowed  first  to  send  out 
ships  independent  of  the  fleets,  and  then  in  1748  the  fleets 
were  given  up  altogether.  The  prohibition  on  commerce 
between  the  colonies  was  removed,  and  many  new  ports  in 
America  were  opened  to  the  European  trade.  An  indication 
of  the  results  that  might  follow  such  a  change  in  policy  had 
been  furnished  by  the  experience  of  Havana.  When  this  city 
was  captured  by  the  English  in  1762  and  thrown  open  to 
English  trade,  727  merchant  vessels  entered  the  harbor  in  less 
than  a  year.  Even  though  the  prohibition  of  trade  with 
foreigners  was  still  retained;  the  effect  of  the -reform  in  policy 


184  A  HISTORY  OF  COMMERCE 

was  nothing  less  than  magical.  In  ten  years  the  trade  and 
the  customs  duties  increased  about  eightfold. 

The  reform  came  too  late  to  benefit  the  Spanish  industrial 
system.  The  colonies  were  destined  to  exercise  their  new 
strength  in  breaking  their  old  bonds;  while  the  home  industries 
had  decayed  so  far  that  a  revival  was  impossible  in  competition 
with  industries  of  more  progressive  nations.  We  leave  Spain 
in  the  eighteenth  century  as  we  found  her  in  the  fifteenth 
century,  serving  the  other  countries  of  Europe  by  the  produc- 
tion of  raw  materials,  and  dependent  on  them  for  her  manu- 
factured goods.  Running  through  the  list  of  the  principal 
Spanish  exports  in  the  eighteenth  century  we  find  among 
them  some  that  had  undergone  the  first  stage  of  manufacture, 
like  wine,  oil,  soap,  soda,  and  iron;  but  most  were  simple  raw 
materials  such  as  wool,  salt,  fruits,  and  nuts. 

211.  Portugal;  promise  of  commercial  greatness  in  the 
sixteenth  century.  —  The  little  country  of  Portugal,  numbering 
perhaps  a  million  inhabitants,  built  up  in  the  sixteenth  century 
a  commercial  empire  worthy  to  rank  with  that  of  Spain,  and 
exceeding  in  importance  that  which  any  of  the  more  northern 
states  in  Europe  had  yet  established.  I  have  already  recounted 
the  achievements  of  the  Portuguese  in  maritime  explorations. 
The  part  which  they  played  in  these  expeditions  prepared  them 
for  the  oceanic  commerce  which  developed  after  the  discovery 
of  America  and  of  the  sea  route  to  India.  While  other  nations 
stronger  than  Portugal  in  resources  and  industrial  development 
were  still  unready  to  put  forth  their  strength  in  distant  com- 
merce, Portugal  shared  with  Spain  the  extra-European  world, 
and  gained  for  herself  the  richest  part,  the  East.  Da  Gama 
returned  to  Lisbon  in  1499  with  a  cargo  which  repaid  sixty 
times  the  cost  of  the  expedition.  This  was  the  beginning  of  a 
series  of  voyages  devoted  especially  to  the  importation  of  pepper 
and  other  spices,  which  could  be  bought  so  cheaply  in  the 
East  that  they  returned  immense  profits  in  Europe.  Even 
the  gold  and  diamonds  which  came  later  from  Brazil  were 
less  valuable  to  Portugal  than  the  monopoly  she  now  possessed 


SPAIN  AND  PORTUGAL  185 

in  the  spices,  drugs,  dyes,  and  manufactures,  which  formerly 
had  been  obtained  only  by  the  expensive  land  route. 

212.  Failure  of  Portugal  to  maintain  her  position.  —  Por- 
tugal was  favored  not  only  by  conditions  in  Europe,  which 
gave  her  the  start  on  other  states,  but  also  by  conditions  in 
Asia  which  enabled  her  able  agents  to  build  up,  through  naval 
power,  a  commercial  overlordship  which  brooked  no  competi- 
tors, either  Asiatic  or  European. 

Portugal  was,  however,  destined  to  play  a  great  part  in 
European  commerce  for  only  one  century.  We  cannot,  as  in 
the  case  of  Spain,  say  that  a  mistaken  policy  was  the  cause  of 
her  decline,  for  although  the  Portuguese  commercial  policy 
was  very  similar  to  the  Spanish  and  would  have  shown  the 
same  weaknesses  if  it  had  been  allowed  to  develop,  more 
important  forces  were  at  work  to  drive  Portugal  from  the  rank 
which  fortune  had  conferred  upon  her. 

213.  Weakness  in  resources;  bad  effects  of  Spanish  rule, 
1580-1640.  —  Portugal  was  not   only  small  but   industrially 
undeveloped,  and  from  the  very  first  depended  on  other  coun- 
tries for  the  wares  which  she  exported  to  the  East.     Her  ex- 
plorations and  her  distant  commerce  were  due  to  the  energy 
of  the  dynasty  rather  than  that  of  the  people,  and  it  was  the 
misfortune  of  the  country,  in  the  critical  period  1580  to  1640, 
to  fall  under  the  rule  of  Spanish  kings  whose  influence  on  her 
commercial  interests  was  entirely  for  the   bad.     Of  the  806 
vessels  which  Portugal  sent  to   India,   1497-1612,   only   186 
sailed  after  1580,  and  not  only  the  number  but  the  quality 
declined  in  a  period  which  should  have  been  marked  by  growth. 
Countries  like  England  and  Holland,  which  were  far  stronger 
economically  than  Portugal,  refused  longer  to  allow  her  the 
profits  of  trade  while  they  did  the  work  of  production,  and 
the  English  broke  the  power  of  the  Portuguese  in  India,  while 
the  Dutch  drove  them  from  the  eastern  islands. 

214.  Failure  of  Portugal  to  recover  her  position  by  com- 
merce with  Brazil.  —  After  the  recovery  of  her  independence 
in  1640,  Portugal  could  look  only  to  her  American  possession, 


186  A  HISTORY  OF  COMMERCE 

Brazil,  for  the  means  of  developing  her  commerce.  The  Dutch 
were  expelled  from  that  possession,  and  the  discovery  of  gold 
there  stimulated  the  growth  of  trade.  Comparing  the  latter 
part  of  the  eighteenth  century  with  the  earlier  part  of  the 
seventeenth,  the  commerce  between  Portugal  and  Brazil  is 
said  to  have  increased  twenty-fold.  In  place  of  a  dozen  ships 
a  hundred  sailed  every  year  for  America,  returning  with  sugar, 
tobacco,  hides,  brazil-wood,  gold,  and  diamonds. 

The  profits  of  this  commerce,  however,  went  for  the  most 
part  to  foreigners.  Conditions  at  home  had  gone  from  bad  to 
worse.  The  slight  advance  which  the  country  had  achieved 
in  agriculture  and  manufactures  before  the  discoveries  had 
been  lost  by  the  attraction  of  all  energetic  spirits  into  com- 
merce and  navigation.  African  slaves  took  the  place  of  free 
men  in  the  fields.  Portugal  staked  everything  in  the  sixteenth 
century  on  the  chance  of  commercial  greatness,  and  when  she 
lost,  lost  all. 

215.  Dependence  of  Portugal  on  England.  —  "In  1754  Por- 
tugal scarcely  produced  anything  towards  her  own  support. 
Two  thirds  of  her  physical  necessities  were  supplied  by  England. 
England  had  become  mistress  of  the  entire  commerce  of  Por- 
tugal, and  all  the  trade  of  the  country  was  carried  on  by  her 
agents.  The  English  came  to  Lisbon  to  monopolize  even  the 
commerce  of  Brazil.  The  entire  cargo  of  the  vessels  that  were 
sent  thither,  and  consequently  the  riches  that  were  returned 
in  exchange,  belonged  to  them.  Nothing  was  Portuguese  but 
the  name."  Reviewing  the  list  of  exports  to  Brazil  we  find, 
in  fact,  that  they  were  wares  which  Portugal  was  herself  unable 
to  produce,  and  which  were  supplied  by  England:  woolens, 
hats,  stockings,  gloves,  metals,  linens,  etc.  England  had  taken 
advantage  of  her  economic  and  political  weakness  to  make  a 
mere  dependency  of  her,  imposing  treaty  obligations  which 
gave  the  English  producers  every  advantage  in  her  markets, 
and  which  reduced  her  to  a  state  of  pitiable  subjection. 

The  great  Portuguese  statesman,  Pombal,  who  made  the 
statements  quoted  at  the  beginning  of  this  section,  attempted 


SPAIN  AND  PORTUGAL  187 

to  reanimate  industry,  and  succeeded  to  a  slight  extent  in 
throwing  off  the  English  supremacy.  At  the  close  of  the 
eighteenth  century,  however,  Portugal  had  still  only  one  strong 
national  industry,  the  production  of  wine  (port,  so  called  from 
its  place  of  shipment,  Oporto)  for  the  dinner  tables  of  the 
English  upper  classes;  and  in  spite  of  the  efforts  of  Portuguese 
statesmen  even  the  wine  trade  was  controlled  by  English 
merchants. 

QUESTIONS  AND  TOPICS 

1.  What  are  the  chief  exports  of  Spain  at  present?    [Commercial 
geography  or  Statesman's  Year-Book.] 

2.  Write  a  report  on  beggary  and  vagrancy  in  Spain  after  1500. 
[Moses,  in  Journal  Pol.  Econ.;  Prescott  or  Motley.] 

3.  Write  a  report  on  the  results  (especially  the  economic  results)  of 
one  of  the  following: 

(a)  The  Inquisition. 

(6)  Expulsion  of  the  Jews. 

(c)  Expulsion   of  the   Moriscoes. 

[See  the  various  books  by  H.  C.  Lea.] 

4.  Verify  the  statements  concerning  the  character  of  Spanish  govern- 
ment in  sect.  200.     [Prescott  or  Motley.] 

5.  With  reference  to  sect.  201,  what  is  regarded  as  a  reasonable  rate 
of  taxation  in  the  U.  S.  now?    [See  a  manual  of  Civics,  that  by  John 
Fiske,  for  instance.] 

6.  Write  a  report  on  the  decline  of  Spain  in  productive  power  as  the 
result  of  bad  government.     [Moses  in  Jour.   Pol.   Econ.,  Jones  in  No. 
Amer.  Review.] 

7.  In  what  parts  of   the   world   is  Spanish  still  the  common  lan- 
guage? 

8.  Write  a  report   on  the   beginnings  of    Spanish   colonial  policy. 
[Bourne,  chap.  14.] 

9.  Write  a  report  on  the  Spanish  system  of  fleets.     [Bourne,  chap.  19; 
Roscher.] 

10.  Was  there  any  good  reason  for  the  sailing  of  ships  in  fleets? 
[See  in  Oxley  the  chapter  describing  the  exploits  of    Drake    and  other 
freebooters.] 

11.  Write  a  report  on  the  great  Spanish  fairs  in  America.    [Bourne, 
pp  291-293 ;  Roscher.] 

12.  Spanish    emigration    to    America.     [Bourne,    chap.    16;    Moses, 
Spanish  rule.] 


188  A   HISTORY  OF  COMMERCE 

13.  Restrictions  on  intercolonial  trade.     [Bourne,  p.  289  ff.;  Moses; 
Roscher.] 

14.  History  of  smuggling  in  the  Spanish  colonies.     [Bourne,  chap.  19; 
Roscher;  manuals  of  English  history  in  connection  with  the  treaty  of 
1713  and  the  "War  of  Jenkins'  Ear,"  1739.] 

15.  Write  a  brief  report  on  the  characteristics  and  history  as  a  ware 
of  commerce  of  one  of  the  following:  cochineal,  cocoa,  vanilla,  cinchona, 
or  quinine.     [Encyc.;  Willis,  Practical  flora;  manuals  and  encyclopedias 
of  commerce.] 

16.  Assuming  that  most  of  the  manufactures  in  the  list  of  exports 
from  Spain  were  furnished  by  other  countries,  what  do  you  infer  as  to 
the  economic  hold  of  Spain  on  her  colonies  —  was  trade  with  the  mother- 
country  a  necessity  to  the  dependencies? 

17.  Write  a  report  on  the  reform  of  the  colonial  system  and  the  light 
that  the  results  throw  on  early  policy.     [Bourne,  p.  295  ff .;  Roscher.] 

18.  History  of  the  Portuguese  in  the  East  in  the  sixteenth  century. 
[Stephens,  chap.  9;  W.  W.  Hunter,  History  of  British  India,  vol.  1.] 

19.  Effects  of  the  sixty  years  of  Spanish  rule.    [Stephens,  chap.  13-] 

20.  History  of  the  Portuguese  hi  Brazil.    [Stephens,  chap.  10;  Keller 
in  Yale  Review,  Feb.,  1906.] 

BIBLIOGRAPHY 

Reference  may  be  made  at  this  point  to  C.  K.  Adams,  Manual  of  his- 
torical literature,  third  ed.,  N.  Y.,  Harper  [1888],  as  a  bibliographical  aid 
which  is  far  from  answering  modern  requirements,  but  which  may  still  be 
of  use  to  a  teacher  in  handling  such  collections  of  books  as  may  be  found 
in  a  city  library.  A  bibliography  of  Spanish  history  in  the  sixteenth 
century  is  appended  to  Cambridge  Mod.  Hist.,  vol.  1,  chap.  11,  and  is 
continued  in  later  volumes.  A  bibliography  is  given  also  in  Martin  A.  S. 
Hume,  The  Spanish  people,  N.  Y.,  1901,  a  book  which  covers  Spanish 
history  from  the  earliest  to  present  times,  and  which  pays  some  attention 
to  social  history. 

Of  general  books  on  Spanish  history,  Prescott,  Motley,  etc.,  may  still 
be  put  to  good  use.  Attention  should,  however,  be  especially  directed 
to  the  writings  of  *  H.  C.  Lea,  which  contain  valuable  social  and  economic, 
material.  A  useful  paper  by  Bernard  Moses,  **  The  economic  condition 
of  Spain  in  the  sixteenth  century,  has  been  published  both  in  the  Journal 
of  Polit.  Econ.,  Chicago,  1892-3,  vol.  1,  pp.  513-534,  and  in  Report  of 
Amer.  Hist.  Assoc.,  1893,  Washington,  1894,  pp.  123-133.  The  Story  of 
Spain  in  the  Story  of  the  Nations  series  is  of  no  value  for  our  purposes. 

On  the  colonial  history  and  policy  of  Spain  the  student  has  several 
excellent  books:  E.  G.  Bourne,  **  Spain  in  America  (with  bibliography); 


SPAIN  AND  PORTUGAL  189 

Habler,  **  The  colonial  kingdom  of  Spain,  in  H.  Helmolt,  Hist,  of  the 
World,  vol.  1,  pp.  386-422,  N.  Y.,  Dodd,  Mead  &  Co.,  1902;  Roscher, 
**  The  Spanish  colonial  system,  N.  Y.,  Holt,  1904,  Moses,  *  The  estab- 
lishment of  Spanish  rule  in  America,  N.  Y.,  Putnam,  1898. 

Two  scholarly  works  in  the  series  of  Harvard  Economic  Studies  deserve 
the  attention  of  the  serious  student:  Clarence  H.  Haring,  Trade  and 
navigation  between  Spain  and  the  Indies  in  the  time  of  the  Hapsburgs, 
vol.  19,  1918,  and  Julius  Klein,  The  Mesta,  a  study  in  Spanish  economic 
history,  1273-1836,  vol.  21,  1920. 

The  best  single  reference  on  Portugual  is  H.  Morse  Stephens,  *  Por- 
tugal. For  the  Portuguese  colonial  ventures  see  Keller,  **  Colonization, 
chap.  3,  The  Portuguese  in  the  East,  chap.  4,  The  Portuguese  in  Brazil. 


CHAPTER  XX 

THE  NETHERLANDS 

216.  Establishment  of  th'e  United  Netherlands.  —  With  the 
decline  of  Spain  and  Portugal  the  supremacy  in  European 
commerce  passed  definitely  to  the  countries   of  the  North. 
The  country  which  first  took  the  lead,  and  which  we  shall 
consider  next,  was  the  Netherlands,  or  as  it  is  often  called  from 
its  main  province,  Holland.     The  Netherlands,  which  has  now 
an  area  but  one  fourth  of  that  of  New  York  State,  was  a  part 
of  the  possessions  which  by  marriage  and  politics  had  come 
under  the  rule  of  the  Spanish  crown.     Its  natural  resources 
are  slight,  and  in  the  early  part  of  the  sixteenth  century  it 
was  far  behind  the  adjoining  Spanish  territory  now  known  as 
Belgium,    which   contained    the   developed    manufactures    of 
Planders  and  the  great  port  of  Antwerp.     The  Dutch  were 
strong,  however,  in  the  individual  capacities  of  the  people, 
and  in  spite  of  the  disparity  of  the  contest  were  able  to  win 
their  independence  from  Spain  in  the  Revolution  which  came 
in  the  last  part  of  tlie  sixteenth  century. 

A  variety  of  causes  combined  to  urge  the  Dutch  to  revolt. 
They  suffered  under  Spanish  rulers  political  oppression,  and 
religious  persecution  designed  to  crush  the  Protestant  move- 
ment which  they  had  embraced.  They  suffered  also,  however, 
under  the  commercial  restrictions  of  Spanish  policy.  These 
they  could  bear  so  long  as  they  found  an  outlet  for  their  growing 
commerce  by  trade  with  the  East  through  Portugal,  but  the 
union  of  the  crowns  of  Spain  and  Portugal  in  1580  closed  even 
this  outlet,  and  forced  them  to  fight  for  the  means  of  existence 
and  of  growth. 

217.  Rise  of  Dutch  commerce.  —  The  Dutch  were  forced 


THE  NETHERLANDS  191 

to  the  sea  by  the  difficulties  of  life  at  home,  and  had  made 
good  progress  in  commerce  with  their  European  neighbors 
before  their  revolt.  They  had  become  used,  also,  to  distant 
voyages  by  explorations  designed  to  open  up  new  routes  for 
trade.  In  the  vain  attempt  to  establish  a  northeast  route  to 
India  by  the  Arctic  ocean  they  showed  especial  energy;  and 
the  names  Tasmania,  Van  Diemen's  Land,  New  Zealand,  attest 
their  boldness  later  in  exploring  the  southern  hemisphere. 
When,  therefore,  they  had  achieved  their  independence  and 
needed  no  longer  to  fear  the  threats  of  Spanish  and  Portuguese 
rulers,  they  made  rapid  strides  in  oceanic  commerce.  Before 
1602  sixty-five  ships  had  made  the  return  voyage  to  India, 
and  throughout  the  seventeenth  century  an  active  commerce 
was  maintained  with  both  Asia  and  America. 

218.  Dutch  commercial  policy.  —  We  are  tempted,  by  the 
position  that  the  Netherlands  took  against  Spanish  oppression, 
to  ascribe  to  the  Dutch  a  greater  love  of  liberty  than  they 
actually   had.     The  government   which  they   established   for 
themselves  was  marked  by  serious  faults   of  oppression  and 
corruption,  and  their  commercial  policy  was  nearly  as  narrow 
as  that  of  Spain.     The  exclusion  of  foreigners  from  trade  with 
their  distant  dependencies  was  only  natural  in  this  period  of 
commerce;  even  the  Dutch,  however,  were  not  free  to  trade 
as  they  pleased.     The  colonial   commerce  was  absorbed  by 
great  companies,  which  were  granted  a  monopoly  of  trade  in 
certain  areas,  and  which  regulated  this  trade  with   extreme 
minuteness.     The  companies  had  a  complicated  organization 
which  prevented  efficiency  and  encouraged  the  improper  use 
of  personal  and  political  influence. 

219.  The  Dutch  West  India  Company.  —  The  Dutch  West 
India  Company,  founded  in  1621,  controlled  the  trade  west  of 
the  Cape  of  Good  Hope,  comprising  commerce  with  the  west 
coast  of  Africa,  and  the   east   coast   of  the  Americas.     This 
company  was  an  extraordinary  specimen  of  its  kind.     It  paid 
high  dividends  for  a  time,  but  its  earnings  were  necessarily 
precarious  for  it  made  them  not  from  the  ordinary  operations 


192  A  HISTORY  OF  COMMERCE 

of  commerce  and  colonization,  but  from  armed  attacks  on  the 
Spanish  silver  fleets.  It  was  really  a  corporation  of  privateers. 
The  character  of  the  company  can  be  estimated  from  the 
fact  that  it  actually  opposed  peace  between  the  Netherlands 
and  Spain;  in  its  remonstrance  of  1633  it  said  that  the  services 
desired  of  it  "  for  the  welfare  of  our  Fatherland  and  the  destruc- 
tion of  our  hereditary  enemy  could  not  be  accomplished  by 
the  trifling  trade  with  the  Indians,  or  the  tardy  cultivation  of 
uninhabited  regions,  but  in  reality,  by  acts  of  hostility  against 
the  ships  and  property  of  the  King  of  Spain  and  his  subjects." 

The  Dutch  soon  lost  their  possessions  in  Brazil  and  New 
Netherland  (New  York),  and  the  original  company  was  dis- 
solved; the  possessions  which  the  Dutch  retained  on  the  coast 
of  Guinea  and  in  South  America  were  unimportant.  Small 
islands  in  the  Gulf  of  Mexico,  which  in  themselves  produced 
little  of  value,  served  as  stations  for  the  Dutch  carrying  trade, 
which  continued  to  be  considerable. 

220.  The  East  India  Company.  —  The  East  India  Company, 
founded  in  1602,  which  secured  from  the  Dutch  government 
the  monopoly  of  trade  and  rule  from  the  Cape  of  Good  Hope 
to  the  Straits  of  Magellan,  enjoyed  a  longer  existence.  It 
established  trading  stations  on  various  points  of  the  Asiatic 
coast  and  in  South  Africa,  but  found  the  mainstay  of  its  power 
in  the  rich  islands  of  the  Malay  archipelago,  especially  in  the 
small  group  of  spice  islands  and  in  Java.  Here  it  broke  the 
power  of  the  Portuguese,  and  gained  for  itself  a  partial  or  total 
monopoly  of  some  of  the  products,  which  were  among  the  most 
highly  prized  luxuries  of  Europe. 

In  1677  a  fleet  consisting  of  one  small  vessel  and  six  large 
ships,  of  which  each  carried  a  crew  of  about  100  sailors  and 
25  marines,  brought  a  cargo  booked  at  nearly  two  million 
gulden  (or  several  million  dollars).  The  cargo  included  im- 
mense quantities  of  pepper,  nutmegs,  mace,  and  cinnamon; 
raw  silk,  and  silk  and  cotton  textiles  from  Persia  and  India; 
indigo,  borax,  saltpeter,  shellac,  fine  woods,  etc.  Neither  tea 
nor  coffee  appears  in  this  list,  but  in  the  next  century,  when 


THE  NETHERLANDS 


193 


the  Dutch  had  developed  their  commerce  with  eastern  Asia 
and  had  stimulated  the  cultivation  of  new  products  in  Java, 
these  and  other  wares  became  of  the  first  importance.  The 
cargo  of  a  fleet  of  1739  included  the  following  wares,  in  the 
order  of  their  value;  tea,  coffee,  pepper,  sugar,  mace,  nutmeg, 
camphor,  indigo,  cloves,  etc. 


EUROPEAN  POWERS 

IN  THE  EAST 

ABOUT-1TOO 


Note  that  several  powers  had  established  themselves  on  the  coast  of  India ;  the 
British  did  not  win  the  position  of  unquestioned  superiority  until  toward  1800. 

221.   Leading  position  of  the  Dutch  in  European  commerce. 

-  Historians  often  speak  of  this  distant  commerce  of  the 
Dutch  as  forming  the  basis  for  their  great  prosperity  in  the 
seventeenth  century.  Figures  are  lacking  which  would  enable 
us  to  determine  the  exact  proportion  of  this  distant  trade  to 
the  total,  but  the  importance  of  this  new  branch  of  commerce 
was  probably  exaggerated  by  reason  of  the  strong  appeal  it 
made  to  the  imagination  of  men  of  the  time.  Certainly  the 
Dutch  were  not  dependent  on  the  Indian  trade  for  the  position 
they  took  among  commercial  nations  then.  In  the  seventeenth 
century  more  than  half  of  the  Dutch  ships  sailed  for  some 


194  A  HISTORY  OF  COMMERCE 

port  on  the  North  or  Baltic  seas.  In  1640,  1,600  ships  out  of 
a  total  of  3,450  passing  through  the  Sound  to  the  Baltic  were 
Dutch;  and  at  this  time  a  Dutch  official  declared  that  grass 
would  grow  in  the  Amsterdam  exchange  and  ships  would  be 
sold  for  firewood  if  the  Baltic  trade  were  not  kept  free. 

Thirty  to  forty  Dutch  ships  went  every  year  to  Archangel, 
then  the  chief  port  of  Russia,  and  carried  the  products  in 
which  the  Hansa  had  formerly  dealt  to  the  Netherlands  and 
to  the  west  coasts  of  France  and  Spain;  Dutch  ships  almost 
monopolized  the  trade  between  Spain  and  the  northern  coun- 
tries after  1648,  exporting  15,000  to  16,000  bales  of  wool  a 
year  from  that  country  while  French  and  English  together 
exported  but  3,000.  Dutch  exports  reached  a  figure  in  the 
seventeenth  century  which  was  not  attained  by  the  English 
until  1740.  Even  the  Dutch  fisheries,  which  employed  over 
2,000  boats,  were  said  to  be  more  valuable  than  the  manufac- 
tures of  France  and  England  combined.  A  Dutch  contem- 
porary asserts,  indeed,  that  as  many  persons  were  occupied  in 
the  fisheries  as  in  commerce. 

222.  Growth    of    business    activity.  —  The    prosperity    of 
Dutch  foreign  commerce  was  reflected  in  business  activity  at 
home.     The  Netherlands  rapidly  outstripped  the  southern  low 
countries  (now  Belgium),  which  suffered  cruel  repression  under 
Spanish  rule;  and  the  great  commerce  of  Antwerp  passed  to 
Amsterdam.     Speculation    and    banking    developed    in    their 
various  forms  and  the  Netherlands  became  the  money  center 
of  Europe.     Scholars  find  in  the  Dutch  business  life  of  this 
period  many  features  which  are  strikingly  modern;  speculation 
in  stocks,  commercial  crises,  pools,  and  "trusts."     Manufac- 
tures felt  the  impulse  of  progress,  and  broke  the  bonds  of  the 
old  gild  system  for  more  modern  forms  of  enterprise.     Large 
establishments  grew  up;  new  industries  were  introduced  (hats, 
silk,  tanning,  etc.);  the  Huguenot  refugees  expelled  from  France 
were  granted  a  welcome  for  which  they  gave  a  rich  return. 

223.  Commercial  decline  of  the  Netherlands.  —  When  and 
why  did  the  Netherlands  lose  the  commanding  position  in 


THE  NETHERLANDS  195 

European  commerce?  What  country  took  the  lead  away  from 
it?  Those  are  questions  which  the  student  of  the  history  of 
commerce  must  face,  and  in  the  following  paragraphs  the 
answers  will  be  given. 

There  is  no  doubt  about  the  last  point;  Netherland  lost 
the  leadership  to  England.  The  time  when  this  change  oc- 
curred can  be  stated  with  almost  equal  brevity;  it  was  during 
the  one  hundred  years  between  1650,  roughly  the  date  when 
Cromwell  gathered  up  the  scattered  forces  of  England  to  use 
them  for  her  commercial  advancement,  and  1750,  when  the 
commercial  supremacy  of  England  could  no  longer  be  ques- 
tioned. 

The  reasons  for  the  change  are  as  usual  the  hardest  as 
they  are  certainly  the  most  valuable  topics  to  be  studied. 
One  reason  can  be  stated  here  as  a  fact,  to  be  proved  after- 
wards in  detail,  that  England  was  growing  stronger.  On  the 
Dutch  side,  was  the  Netherlands  growing  weaker,  or  did  it 
simply  fail  to  keep  pace  with  the  English  advance? 

224.  Reasons  for  decline.  —  So  far  as  the  facts  are  known 
Dutch  commerce  increased  in  amount  till  about  1730  and 
maintained  about  the  same  figures  afterwards;  but  world 
commerce  was  growing  so  rapidly  that  relatively  the  Nether- 
lands fell  behind.  The  very  size  of  the  Netherlands  told  against 
the  country  in  a  political  contest  with  other  powers.  It  im- 
plied, too,  a  lack  of  native  resources  to  support  commerce  when 
the  hold  of  the  Dutch  on  foreign  trade  was  weakening.  Fur- 
thermore, the  Netherlands  was  like  the  Hanseatic  League  in 
that  it  lacked  a  strong  central  power  and  policy,  and  gave 
great  independence  to  the  separate  units  of  which  it  was 
composed.  The  important  units,  in  the  economic  aspect,  were 
cities,  which  were  able  to  carry  on  a  small-scale  commerce 
very  successfully,  but  which  could  not  unite  to  bring  their 
best  people  to  the  front  in  a  big-scale  organization  which  could 
compete  with  that  of  other  countries.  The  Dutch  did  not  pull 
together  to  make  the  most  of  what  they  had,  and  the  ineffi- 
ciency and  corruption  which  had  always  characterized  the 


196  A  HISTORY  OF  COMMERCE 

local  governments  grew  worse  with  time.  Rule  by  family 
rings  brought  with  it  favoritism  and  inordinately  high  taxes, 
under  which  industries  labored  and  dwindled.  Manufactures 
which  had  formerly  flourished  now  declined.  Weak  at  home, 
and,  in  comparison  with  other  European  states  of  the  eighteenth 
century,  weak  abroad,  the  Netherlands  fell  from  the  first  rank 
of  commercial  states,  retaining  in  its  colonies  and  in  its  de- 
veloped banking  system  only  reminders  of  its  former  greatness. 

226.  Character  of  the  Dutch  East  India  Company.  —  In  the 
eighteenth  century,  when  the  Netherlands  was  struggling  to 
maintain  its  commercial  position,  it  was  hindered  rather  than 
helped  by  the  East  India  Company.  The  company  seemed 
to  have  the  chance  to  make  stupendous  profits,  for  it  sold  its 
wares  for  very  high  prices  in  Europe,  and  it  paid  for  them  in 
Asia  very  little  or  even  nothing.  It  used  its  power  to  force 
the  natives  to  supply  it  with  some  of  these  wares  at  nominal 
prices  or  absolutely  gratis.  The  very  fact,  however,  that  the 
company  could  get  its  wares  in  this  way,  as  a  state  would  get 
them  by  taxation,  suggests  that  the  company  had  expenses 
like  those  of  a  state  and  unlike  those  of  an  ordinary  commercial 
corporation.  This  was  the  fact;  the  company  had  to  support 
the  civil  and  military  establishment  of  a  regular  government. 
This  government  shared,  to  the  full,  the  political  evils  of  the 
time;  both  at  home  and  in  the  East  it  was  corrupt  and  in- 
efficient. It  was  strong  enough  to  hold  its  own  against  the 
Portuguese,  or  against  the  English  when  they  began  their 
expansion  in  the  East;  but  it  was  no  match  for  the  English 
when  their  strength  developed  in  the  eighteenth  century. 

226.  Decline  of  the  Company  after  1700.  —  After  1700  the 
Dutch  East  India  Company  fell  behind  rapidly.  It  enjoyed 
such  a  high  reputation,  and  kept  its  condition  secret  so  suc- 
cessfully, that  its  credit  was  unimpaired,  and  it  continued  to 
pay  dividends  by  borrowing  money.  For  nearly  two  hundred 
years  it  declared  dividends  at  rates  ranging  from  12}  per  cent 
to  20,  40,  or  even  50  per  cent;  the  average  dividend  from 
1602  to  1796  was  over  18  per  cent.  The  crash  was  bound  to 


THE  NETHERLANDS  197 

come  finally;  the  company  paid  its  last  dividend  in  1782,  and 
was  dissolved  in  1798,  leaving  debts  of  over  fifty  million  dollars, 
which  were  assumed  by  the  Dutch  government. 

QUESTIONS  AND  TOPICS 

1.  Commerce  and  industry  of  the  Netherlands  in  the  fifteenth  cen- 
tury.    [Blok,  vol.  2,  chap.  12.] 

2.  Commercial  considerations  involved  in  the  revolt  of  the  Nether- 
lands.    [Rogers,  Holland,  Cambridge  Mod.   Hist.,  or  one  of  the  older 
books  like  Motley.] 

3.  Beginnings  of  Dutch  commerce  with  the  Indies.    [Blok,  vol.  3, 
chap.  9.] 

4.  From  what  Dutch  source  were  the  names  Tasmania,  Van  Diemens 
Land,  New  Zealand,  derived;  when  and  how  were  they  attached  to  coun- 
tries later  bearing  them?    [Encyclopedia.] 

5.  The  Dutch  in  North  America;  was  their  commerce  with  New 
Netherlands  important,  and  did  the  loss  of  their  possession  affect  seriously 
their  carrying  trade?    [See  manuals  of  U.  S.  history  and  the  references 
given  in  them;  note  the  effect  of  the  English  Navigation  Acts.] 

6.  The  Dutch  in  South  America.     [See  Edmundson,  Dutch  trade  on 
the  Amazon,  English  Historical  Review,  1903,  18:  642-663,  and  later.] 

7.  The  policy  of  the  East  India  Company:  trade  and  territorial  ex- 
pansion,  monopoly,    regulation   of   production.     [Day,    Dutch   in   Java, 
chap.  2.] 

8.  The  Dutch  in  the  East  Indies.     [Rogers,  Holland,  chaps.  20,  22.] 

9.  Write  a  report  on  Dutch  commerce  at  the  height  of  its  prosperity: 
countries  traded  with,  wares,  shipping,  fisheries.     [Blok,  History,  vol.  4, 
book  6,  part  3,  chap.  1,  part  4,  chap.  4  ;  vol.  5,  book  7,  chap.  4.] 

10.  The  Bank  of  Amsterdam;  its  peculiarities  and  historical  impor- 
tance.    [Rogers,   Holland,    chap.   24;  Adam   Smith,  Wealth   of  nations, 
Book  4,  chap.  3;  C.  F.  Dunbar,  Theory  and  history  of  banking,  N.Y.,  2d. 
ed.,  1903,  chap.  8.] 

11.  Forerunners  of  modern  trusts  in  the  Netherlands.     [A.  Sayous 
Early  trusts  in  Holland,  Political  Science  Quarterly,  N.  Y.,  1902,  17: 
369-380.] 

12.  The  naval  war  of  the  English  and  Dutch  in  the  time  of  Cromwell 
and  Charles  II.     [Manuals  of  English  history.] 

13.  Dutch  commerce  in  the  period  of  its  decline.     [Blok,  History, 
vol.  5,  book  8,  chap.  5;  vol.  6,  book  9,  chap.  3,  book  10,  chap.  4.] 

14.  Internal  troubles  of  the  Dutch.     [Rogers,  Holland,  chap.  34.] 

15.  The  "contingent  system"  of  the  Dutch  East  India  Company. 
[Day,  Dutch  in  Java,  p.  61  ff.] 


198  A  HISTORY  OF  COMMERCE 

16.  Organization  of  the  Dutch  East  India  Company,  and  its  faults 
[Dutch  in  Java,  chap.  3.^ 

BIBLIOGRAPHY 

The  English  economist,  James  E.  Thorold  Rogers,  has  included  in 
his  *  Story  of  Holland,  N.  Y.,  Putnam,  1889,  several  chapters  on  topics 
of  economic  importance.  A  better,  though  larger  and  more  expensive 
work,  is  Blok's  **  History  of  the  people  of  the  Netherlands.  N.  Y.,  Putnam, 
5  vol.,  1898-1912. 

I  have  attempted  to  cover  the  colonial  and  commercial  history  of  the 
Dutch  in  their  most  important  dependency  in  The  Dutch  in  Java,  N.  Y.,, 
Macmillan,  1904. 


CHAPTER  XXI 
ENGLAND:  SURVEY  OF  COMMERCIAL  DEVELOPMENT 

227.  Survey  of  England's  position  and  resources  about  1500. 

-  The  importance  which  English  commerce  assumed  in  this 
period  and  has  since  maintained,  justifies  us  in  pausing  at  the 
start  to  consider  the  conditions  prevailing  at  the  beginning^ 
of_the^  period,  aboutJJiOfl 

England  and  Wales  together  had  an  area  much  smaller 
than  that  of  most  of  the  important  continental  states,  about 
equal  to  the  area  of  Illinois,  and  less  than  that  of  New  England. 
Ireland  was  a  sort  of  colonial  possession,  counting  for  little; 
Scotland  remained  till  about  1700  an  independent  kingdom, 
and  continued  to  be  relatively  unimportant  after  the  union. 
England  (a  term  which  will  be  used  roughly  for  other  parts 
of  the  United  Kingdom  as  they  were  included)  had  from 
nature  one  endowment  of  supreme  advantage,  separation  by 
the  Chamigl_from  the  Continent,  which  made  unnecessary  for 
defense  the  government  of  a  military  absolutism,  and  allowed 
an  early  development  of  popular  freedom. 

From  the  economic  standpoint,  however,  the  climate  fa- 
vored grazing  rather  than  tillage,  and  the  mineraPresources, 
asidejrom  tin,  were  still  ot  comparatively  little  usei  England 
was  a  poor  as  well  as  a  small  country  in  1500,  needing  to  rely 
upon  the  energy  of  the  people  and  upon  their  cooperation 
among  themselves  and  with  the  government  to  win  a  place 
among  the  leading  countries. 

228.  England's  chief  advantage ;  jier  advanced  organization. 
—  Progress  had  been  made,  however,  in  various  lines  of  which 
the  importance  was  to  appear  as  time  went  on.     Sgr_fHnm  hn.d 
disappeared  from  the  country  districts,  and  production  was 

199 


200  A   HISTORY  OF  COMMERCE 

stimulated  by  a  fair  reward  for  work  well  done.  On  the  basis 
of  their  nourishing  _sheeg_jndustry  the  English  had  built  up  a 
cloth_manufacture .which  had  outgrown  the  narrow  restrictions 
of  the  old  gild  system,  and  won  the  inestimable  advantage  of 
an  organization  like  that  of  modern  times;  the  industry  was 
not  so  much  ruled  by  antiquated  custom  or  by  the  laws  of 
politicians,  as  guided  by  specialists  who  had  invested  their 
capital  in  manufacture  or  trade,  and  who  linked  their  fortunes 
with  progress  and  extension. 

229.  Benefits oft^JEn^Ush.poJitii^.cjQnstitutioii.  —  Finally, 
in  summing  up  the  advantages  which  the  English  of  this  period 
enjoyed,  we  must  put  as  perhaps  the  chief  and  certainly  a 
very  important  one,  their  political  development.     They  were 
not  only  spared  from  the  necessity  of  using  their  resources  to 
repel  a  foreign  invasion,  they  had  attained  to  national  unity 
among  themselves;  and  they  had  a  government  which,  however 
crude  it  may  seem  now,  was  much  more  closely  in  touch  with 
the  people  than  that  of  most  states,  and  which  proved  capable 
of  further  development  at  comparatively  slight  expense,  meas- 
ured in  men  and  money.     The  student  who,  in  estimating  the 
commercial  assets  of  England  during  this  period,  left  out  of 
account  the  English  constitution  would  go  wide  of  the  mark. 
Spanish  inquisition  and  expulsions,  Dutch  corruption,  French 
oppression  and  revolution,  German  or  Italian  disunion  —  to 
be  free  from  these  was  worth  great  wealth. 

230.  Development  of  the  English  into  an  active  commercial 
people  about  the  fifteenth  century.  —  The  English  historian, 
Seeley,  combats  the  idea  that  it  is  "  in  the  blood  "  of  English- 
men, that  it  is  "the  genius  of  the  race"  to  be  a  maritime  and 
colonizing  people.     During  the  Middle  Ages,  in  fact,  the  English 
were  not  great  navigators,  in  spite  of  the  facilities  offered  by 
the  excellent  harbors  and  the  rivers  penetrating  far  inland; 
English  commerce  was  carried  on  largely  by  foreigners,  as  has 
been  said  in  a  previous  section.     The  advance  of  the  English 
from  passive  to  active  commerce  came  at  the  close  of  the 
Middle  Ages,  in  the  fifteenth  and  sixteenth  centuries.     In  1400 


ENGLAND:  SURVEY  OF  COMMERCIAL  DEVELOPMENT      201 

English  merchandise  was  mostly  borne  in  foreign  ships;  in 
1500,  it  is  said.  English  vessels  carried  more  jbhan  half  of  all_ 
the  cloth  exported,  and  about  three  fourths  of  all  the  other 
wares. 

231.  Agencies    helping    to    extend    English    commerce.  — 
Among   the    influences    aiding    the    development    of    English 
commerce  in  this  period  we  must  put  the  skilful  diplomacy 
of  the  so  vereignsofjLhe Tudor  line^  which  secured  important 
privileges  for  English  merchants  in  other  countries,  and  the 
energy   of  the  fellowship  of  Merchants   Adventurers,   which 
made  the  most  of  these  privileges.     The  Merchants  Adventurers 
differed  from  the  Merchants  Staplers  (see  section  126),  in  three 
important  points,  each  of  which  marks  an  advance:  they  were 
all    native   Englishmen   instead   of   foreigners;   they   exported 
jngjiufactured_goods,  chiefly  cloth,  instead  of  raw  materials; 
they  were  not  bound  to  a  fixed  staple  but  "adventured"  to 
different   places.     Though  the  association  was  not   nearly  so 
close  as  that  of  later  stock  companies,  it  was  strong  enough  to 
protect  the  interests  of  English  commerce  against  abuses  by 
individual  merchants  and  attacks  by  foreigners;  and  was  es- 
pecially helpful  in  pushing  English  trade  along  the  coast  of 
the  North  Sea  (Flanders,  Netherlands,  Germany). 

232.  Enlargement  of  the  commercial  area.  —  Beyond  these 
nearby  districts  English  merchants  were  building  up  an  im- 
portant trade  with  Spain  and  Portugal  in  the  South,  and  with 
the  Scandinavian  countries  in  the  North,  where  the  Hanseatic 
League  was  now  unable  to  hold  its  own.     English  ships  were 
voyaging  further  still.     Bristol  merchants  like  Sturmys  and 
Canning  built  up  merchant  fleets  of  considerable  size,  and  sent 
them  as  far  as  the  eastern  shore  of  the  Mediterranean  and  the 
coasts  of  Iceland  and  Finland.     A  London  grocer  recorded  in 
his  diary  about  1550  the  voyage  of  an  English  vessel  to  "  Rus- 
sier"  laden  with  "English  bookes  of  the  Scriptures"  and  with 
other  wares  which  probably  sold  to  better  advantage. 

Nor  have  we  yet  reached  the  limit  of  English  voyages. 
American  readers  are  familiar  with  the  exploits  of  the  Cabots, 


202  A   HISTORY  OF  COMMERCE 

which  began  a  series  of  frequent  voyages  to  America,  and 
-which  were  followed  by  daring  expeditions  to  the  far  North 
in  search  of  a  passage  to  India,  either  east  or  west.  These 
distant  voyages  were  too  venturesome  as  yet  to  be  the  means 
of  regular  commerce;  they  sought  rather  discoveries  or  plunder. 
The  English  merchant  who  went  outside  the  narrow  circle  of 
civilized  Europe  turned  his  hand  chiefly  to  smuggling,  kid- 
napping, robbery,  and  murder.  John  Hawkins  shared  with 
Queen  Elizabeth  the  profits  of  the  African  slave  trade,  and  was 
proud  to  add  to  his  coat  of  arms  a  demi-Moor  proper,  bound 
with  a  cord,  to  record  his  achievements. 

233.  Relative  standing  of  the  English  ports.  —  An  idea  of 
the  relative  rank  in  foreign  commerce  of  the  English  ports  can 
be  gained  from  the  proportions  which  they  contributed  to  the 
•customs  revenue.     The  most  striking  fact  is  the  immense  lead 
of  London. over  other  ports,  like  that  of  New  York  in  the  United 
States  now;  it  contributed  half  of  the  total  in  the  time  of 
Henry  VII  (say  1500).     The  second  port,  ^Southampton^  fell 
in  this  period  from  18  per  cent  to  9  per  cent;  the  Flanders 
galleys  had  ceased  coming,  and  the  Guinea  trade,  by  which  it 
revived  later,  had  not  yet  begun.    ^Newcastle  upon  Tyne  jjaid 
5  per  cent  of  the  total,  while  the  port  of  Bristol,  destined  to 
be  later  the  great  haven  for  the  American  trade,  paid  only 
3  per  cent  and  was  exceeded  by  JBogton.     No  other  port  than 
those  named  contributed  as  much  as  3  per  cent  of  the  total 
customs  revenue.     The  list   of  minor  ports  comprises  some 
which  had  been  great  in  the  Middle  Ages  but  which  were  now 
rapidly  declining  in  relative  importance  (Ipswich,  Sandwich, 
etc.),  some,  like  Hull,  which  were  destined  to  grow  in  impor- 
tance, while  great  modern  ports  like  Liverpool  and  Cardiff  are 
not  yet  heard  of  at  all. 

234.  Partition  of  the  field  of  commerce  among  companies.  — 
The  reader  will  remember  the  discussion  in  a  previous  section 
of  the  difficulties  experienced  in  this  period  when  commerce 
was  left  to  individuals,  and  the  reasons  for  the  association  of 
the  merchants  who  traded  to  any  country.     With  that  dis- 


204  A  HISTORY  OF  COMMERCE 

cussion  in  mind  the  organization  of  English  commerce  in  the 
period  of  the  later  sixteenth  century  and  following  years  will 
not  seem  so  strange  as  it  may  appear  to  be  at  first.  An-oreU- 
nary  Englishman  could  trade  about  1600  with  only  three 
countries:  France,  Spain,  and  Portugal.  Commerce  with  the 
rest  of  the  world  could  be  carried  on  only  by  members  of 
specific  companies,  who  had  mapped  out  and  occupied  the 
routes  of  trade  much  as  modern  railroads  divide  the  territory 
inside  a  country.  Beginning  in  the  North  and  going  around 
the  compass  the  companies  were  as  follows:  h 


Company,  trading  to  Scandinavia  and  the  Baltic;  the  Russia 
Company;  the  Merchant  Adventurers,  controlling  trade  from 
Denmark  to  France,  where  the  free-trade  gap  appears_^_the 
Levant  Company,  trading  in  the  Mediterranean;  the  Guinea  or 
African  Company;  the  East  India  Company,  with  its  immense 
Asiatic  field;  and  then  the  various  companies  familiar  to  stu- 
dents of  American  History,  the  Virginia  Company,  the  Ply- 
mouth Company,  later  the  Hudson's  Bay  Company,  etc.  By 
means  of  the  trade  of  these  companies  England  marketed  her 
surplus  wares,  especially  her  woolen  fabrics,  and  imported  the 
goods  of  which  she  stood  in  need  —  naval  stores  from  the 
Baltic,  manufactures  and  wine  from  the  Continent,  gold  from 
Africa  (cf.  the  English  "guinea"  of  twenty-one  shillings), 
Oriental  products,  and  furs  and  fish  from  America.  The 
colonies  which  had  been  founded  in  the  New  World  were  still 
too  young  to  affect  greatly  the  sum  total  of  English  trade  in 
the  early  seventeenth  century,  but  increased  rapidly  in  com- 
mercial importance. 

235.  Characteristics  of  the  companies.  —  In  their  organi- 
zation and  development  these  companies  show  such  variety 
that  it  is  impossible  here  to  do  more  than  indicate  some  com- 
mon features  of  their  history.  They  tended  to  one  of  the  two 
types  (joint-stock  or  regulated)  which  have  been  described, 
and  sometimes  wavered  between  the  two.  The  monopoly 
which  they  enjoyed  made  them  unpopular  with  the  public, 
who  thought  that  it  was  used  to  secure  unduly  high  profits, 


ENGLAND:  SURVEY  OF  COMMERCIAL  DEVELOPMENT      205 

and  still  more  unpopular  with  private  merchants  who  were 
prevented  from  sharing  in  the  trade.  These  merchants  who 
could  not  gain  admission  to  the  companies,  because  of  lack  of 
capital,  or  distance  from  London,  formed  a  class  of  "inter- 
lopers" or  smugglers  trading  inside  the  companies'  preserves. 
Toward  the  close  of  the  seventeenth  century  the  feeling  against 
the  companies  grew  so  strong  that  reform  was  forced  upon 
them;  entrance  fees  were  lowered  or  exclusive  privileges  were 
takerf  away  and  the  trade  was  thrown  open.  Some  of  the 
companies  continued  to  exist,  however;  the  greatest  of  them 
all,  the  East  India  Company,  kept  its  hold  on  the  trade  with 
Asia4  and  other  companies  continued  as  semi-public  or  private 
corporations  after  their  chief  privileges  had  been  annulled. 
The  Levant  Company  was  not  dissolved  till  1825,  and  the 
Hudspn/s  Bay  Company  is  still  in  existence,  as  an  ordinary 
trading  corporation. 

236.  Rapid  growth  of  commerce  in  the  eighteenth  century. 
—  The  period  in  which  the  companies  were  most  active,  roughly 
the  seventeenth  century,  was  preparatory  to  the  period  of 
individual  enterprise  which  in  the  eighteenth  century  brought 
England  to  the  leading  position  among  the  commercial  states. 
The  advance  is  shown  by  the  following  table,  giving  in  millions 
of  pounds  sterling  (and  a  rough  equivalent  in  dollars)  the 
annual  average  of  trade  in  the  different  periods: 


Average  of 

Imports 

Exports 

1698-1701 
1749-1755 
1784-1792 
1802 

£  5.5       $  27 
8.2           41 
17.7           88 
31.4         157 

£  6.4       $  32 
12.2           61 
18.5           92 
41.4         207 

The  figures  show  that  the  foreign  trade  of  England  grew 
between  five  and  six  fold  in  the  course  of  the  century;  that  it 
advanced  considerably  in  the  first  half,  but  moved  with  the 
speed  of  a  revolution  in  the  second. 

237.  Relative  share  of  different  continents  in  English  com- 
merce. —  An  indication  of  the  direction  of  the  trade,  and  of 


206  A   HISTORY  OF  COMMERCE 

the  relative  importance  of  different  elements  in  it,  is  given  in 
the  following  tables,  the  figures  again  being  simplified  to  round 
millions.  The  commerce  of  England  was  distributed  as  follows : 

Europe         |      America  Asia         |          Africa         |  Total 


1698-1701  .  . 
1749-1755  .  . 
1784-1792.. 
.  .  .  1802  .  .  . 

£  9.2  $  46 
13.8    69 
19.6    98 
39.4   197 

£  1.7  $  8 
4.5   12 
10.8   54 
23.3   116 

£  0.8  $  4 
1.8    9 
4.9   24 
8.7   43 

£  0.1  $  .5 
0.2   1 
0.9   4 
1.3   6 

£  12.0  $  60 
20.4    102 
36.2    181 
72.8    364 

The  student  may  perhaps  need  the  caution  that  he  should 
not  attempt  to  learn  outright  such  statistics  as  are  given  here; 
the  attempt  would  be  a  waste  of  energy.  The  figures  give 
more  concisely  than  any  other  method  of  description  the 
measurement  of  a  country's  commerce,  and  are  valuable  for 
reference.  They  must,  however,  be  translated  into  a  more 
simple  expression  of  facts  before  an  ordinary  student  can 
grasp  their  significance  and  hold  it  permanently  in  mind.  In 
the  few  lines  of  text  following  the  first  table  the  author  has 
suggested  the  most  obvious  conclusions  to  be  drawn  from  it, 
and  will  point  out  others  applicable  here. 

The  trade  with  Europe  was  still  by  far  the  most  impor- 
tant part  of  English  commerce,  being  equal  to  more  than  all 
the  rest  of  the  trade  together.  It  grew  steadily  throughout 
the  eighteenth  century,  as  the  figures  show,  but  still  it  was  a 
less  important  part  of  the  whole  in  1800  than  it  had  been  in 
1700.  At  the  earlier  date  other  continents  furnished  but  one 
fourth  of  the  total;  in  1800  they  furnished  nearly  one  half. 
The  two  most  important,  America  and  Asia,  were  coming  up 
with  nearly  equal  speed,  their  commerce  increasing  roughly 
fivefold  in  the  course  of  the  century.  America  had  a  clear 
lead  over  its  older  rival,  while  Africa  counted  for  very  little 
in  the  total. 
• 

QUESTIONS  AND  TOPICS 

1.  Town  life  and  trade  about  1500.     [Soc.  Eng.,  3:  131-145.] 

2.  Economic  and  social  conditions  in  England  in  the  sixteenth  cen- 
tury.    [Harrison's   Description,  ed.   by  L.   Withington,   London,    1902, 


ENGLAND:  SURVEY  OF  COMMERCIAL  DEVELOPMENT      207 

readable  but  too  diffuse  for  a  student  who  has  not  learned  to  select  what 
he  needs  from  a  book.] 

3.  Significance  of  the  "enclosures"  in  English  agriculture.     [Soc. 
Eng.,  3:  544-550;    4:   114-118,  239-241.] 

4.  Development  of  the  manufacturing  system,  as  seen  in  the  cloth 
trade.     [Ashley,  Eng.  econ.  hist.,  vol.  2,  chap.  3.] 

5.  Political  conditions  about  1500.    [Seebohm,  Prot.  rev.,  46-55.] 

6.  The  Merchants  Adventurers:    who  were  they,  in  what  did  they 
trade  and  with  what  countries,  principles  of  organization,  services  to 
English  commerce?      [Lingelbach,  Merchants  Adventurers,  Univ.  of  Pa. 
Pub.,  2  series,  vol.  2,  N.  Y.,  1902,  or  Cunningham,  Growth;  brief  account 
in  Cheyney,  Eur.  background.] 

7.  English   discovery    and  exploration   in   the    sixteenth    century. 
[Soc.  Eng.,  3:  209-228;   477-508.] 

8.  Write  an  account  of  the  career  of  Hawkins.     [Payne,  Voyages; 
J.  A.  Froude,  English  seamen,  N.  Y.,  Scribner,  1895.] 

9.  Write  a  similar  report  on  Drake.     [Same  references,  or  Oxley, 
chap.  5.] 

10.  Indicate  on  a  sketch  map  the  position  of  ports  named  in  sect. 
233,  drawing  a  line  by  each  port  with  a  length  proportional  to  the  im- 
portance of  the  port.    What  are  the  chief  ports  now?    [See  a  later  section 
of  this  book  and  its  note;    Statesman's  Year-Book.] 

11.  Select  one  of  the  companies  named  in  sect.  234  and  report  in 
detail  on  its  commerce  and  career.    [Hewins,  Eng.  trade;    Cunningham, 
Growth,  with  references.    Brief  narratives  of  the  East  India  Company 
and  of  the  Hudson's  Bay  Company  will  be  found  in  Oxley,  chaps.  8.  9.] 

12.  Struggle  between  the  East  India  Company  and  the  interlopers. 
[Cunningham;   Hunter,  Hist,  of  British  India.] 

13.  Prepare  a  graphic  chart  of  the  figures  in  sect.  236  in  the  follow- 
ing manner.    Draw  a  perpendicular  line  at  the  left-hand  edge  of  a  sheet 
of  paper,  mark  off  two  equal  spaces,  and  place  the  dates,  one  at  the  top, 
one  in  the  middle,  and  the  last  two  on  either  side  of  the  end  of  the  line. 
Lines  are  then  to  be  drawn,  horizontally,  proportional  to  the  figures  of 
trade  at  each  date.    This  can  readily  be  done  with  the  aid  of  a  foot  rule, 
divided  into  fractions  of  an  inch.    Choose  first  the  largest  figures  of  the 
table,  in  this  instance  those  for  1802,  to  be  sure  of  having  room  enough 
on  the  paper  for  all  the  lines.    Let  one  of  the  small  divisions  of  the  rule 
represent  a  sum  of  a  million  pounds  or  ten  million  dollars.     If,  for  in- 
stance, 1*5-  is  taken  to  represent  a  million  pounds,  the  line  for  the  imports 
of  1802  will  be  a  little  short  of  two  inches  (-fi).    Let  this  line  then  be  con- 
tinued by  a  dotted  or  wavy  line  to  represent  exports;   the  continuation 
in  this  case  would  be  a  little  over  2-^  inches,  and  the  whole  line  would  be 
a  little  over  4^-  inches  Grf).    Pursue  the  same  method  with  the  other 


208  A   HISTORY  OF  COMMERCE 

figures,  and  the  result  will  be  a  graphic  representation  of  the  course  of 
trade  during  the  period. 

The  scale  may  be  varied  to  suit  convenience,  but  of  course  figures 
cannot  be  directly  compared  with  each  other  unless  they  are  plotted  to 
the  same  scale. 

14.  Prepare  a  chart  by  similar  methods,  but  using  different  colors 
or  characteristic  lines  to  indicate  trade  with  different  regions. 

15.  Reduce  the  figures  of  trade  with  different  continents  to  percent- 
ages of  the  total,  at  different  periods. 

Make  up  your  mind  as  to  the  number  of  conclusions  to  be  drawn  from 
the  tables  "which  you  are  capable  of  remembering  —  whether  one,  two, 
or  more;  resolve  to  remember  those  and  to  refer  back  to  the  tables  for  the 
others. 

BIBLIOGRAPHY 

As  Gross,  Sources,  does  not  cover  the  modern  period,  the  student  in 
search  of  more  extended  bibliographical  information  than  that  given  here 
must  rely  on  less  satisfactory  guides.  Cunningham,  **  Growth,  will  be 
the  best  for  an  advanced  student;  see  the  foot-notes  and  the  bibliographi- 
cal index.  Traill's  **  Social  England  contains  less  scholarly  but  per- 
haps more  useful  bibliographies  on  commerce  and  kindred  topics.  Some 
of  the  school  manuals  give  classified  references;  Andrews'  *  History  can 
be  especially  recommended. 

Of  the  general  works  on  English  history  in  the  period  under  considera- 
tion the  following  pay  some  consideration  to  commercial  development, 
and  those  which  are  starred  present  information  that  is  valuable  and  easily 
available:  *  Busch,  Froude,  Gardiner,  Macaulay,  Stanhope,  *  Lecky.  If 
a  single  work  is  desired  for  collateral  reading  the  best  is  Traill's  **  Social 
England,  to  which  I  have  in  large  part  confined  my  references  for  topical 
reading. 

Cunningham,  **  Growth,  is  indispensable  for  this  period;  I  assume 
that  this  book  is  in  the  hands  of  the  teacher  and  that  he  will  avail  himself 
of  the  abundant  material  it  offers  for  reading  and  written  reports.  Be- 
sides smaller  books  on  English  economic  history,  already  mentioned, 
the  following  can  be  made  useful:  Hewins,  **  English  trade;  Seeley,  *  Ex- 
pansion; Toynbee,  Industrial  revolution.  Bourne,  *  English  merchants, 
is  useful;  his  English  Seamen  is  unfortunately  out  of  print.  There  is  a 
considerable  literature,  however,  on  the  war  and  merchant  navy,  espe- 
cially in  the  sixteenth  century  (see  references  in  Social  England);  and 
Lindsay  and  Cornewall-Jones  cover  the  entire  period. 


CHAPTER  XXII 
ENGLAND: EXPORTS 

238.  Survey  of  topics   to   be   considered   in  studying  the 
development  of  English  commerce.  —  Such  is  the  bare  outline 
of  the  development  of  English  commerce  in  the  period  pre- 
ceding 1800.     Two  chapters  will  now  be  devoted  to  the  dis- 
cussion of  facts  which  will  fill  in  the  outline  and  will  explain 
the  development.     That  the  reader  may  follow  more  intelli- 
gently a  survey  will  be  given  in  this  place  of  the  topics  to  be 
considered,  and  their  bearing  on  the  general  question. 

We  must  know  (1)  the  character  of  English  exports.  The 
exports  of  a  country  show  in  what  lines  it  is  strong  enough  to 
compete  with  foreign  producers,  and  are  the  means  by  which 
it  buys  commodities  produced  abroad.  We  shall  then  con- 
sider (2)  the  advantages  which  enabled  England  to  produce 
these  wares  so  efficiently  that  other  countries  were  glad  to 
buy  of  her,  and  (3)  the  countries  in  which  these  wares  found  a 
jnarket.  On  the  other  side  we  want  to  know  (4)  the  imports, 
the  wares  which  England  wanted  but  could  not  herself  produce 
to  advantage,  and  (5)  the  countries  fj-om_jwhioh  the  imports  . 
came.  Another  factor  of  importance  will  be  (6)  the  develop- 
ment of  English  shipping.  Finally  we  have  to  consider  (7) 
the  government  policy  by  which  statesmen  sought  to  further 
and  regulate  the  development,  as  manifested  in  foreign  policy 
and  wars,  in  the  customs  tariff,  and  in  the  colonial  system. 

239.  (i)  Analysis  of  exports.  —  The  total  export  to  foreign 
countries  of  merchandise  of  English  origin  (i.e.,  nolTmcl'lUliiig   • 
goods  Ifom  other  countries  transshipped  in  England)  amounted 
.about  1800  to  a  Httle  over  £29.000.000.     The  most  important 

items  were  as  follows,  in  millions  of  pounds:  manufactures  of 

209 


210  A  HISTORY  OF  COMMERCE 

wool,  7.7,  or  over  one  fourth  of  the  whole;  manufactures  of 
cotton,  4.1;  manufactures  of  iron  and  steel,  2.0;  haberdashery 
!.">;  linens,  1.  These  five  items  include  over  one  half  of  the 
total,  and  no  other  item  amounted  to  as  much  as  one  million. 
It  is  noteworthy  that  all  the  raw  materials  together  scarcely 
exceeded  one  million.  When  we  come  to  study  the  internal 
development  of  England  we  must  look,  evidently,  for  a  great 
expansion  in  certain  manufacturing  industries  to  explain  the 
position  which  their  products  now  took  in  trade. 

240.  (2)  Development  of  production,  explaining  the  growth 
of  the  export  trade.     Agriculture.  —  Turning  our  attention  now, 
not  to  the  foreign  commerce  of  England  but  to  the  conditions 
at  home  which  made  this  commerce  possible,  we  find  that  during 
the  two  centuries  following  1600  there  was  a  steady  develop- 
ment of  internal  resources.     The  growth  of  population  stimu- 
lated improvement  in  agriculture;  and   cultivators  managed, 
by  new  crops  and  methods,  to  increase  largely  the  output  in 
spite  of  the  disadvantages  of  soil  and  climate.     Root  crops 
(turnips  and  carrots)  and  clover  were  grown  on  fields  which 
before  had  been  allowed  to  lie  fallow,  and  the  produce,  con- 
verted into  meat  and   manure,  was  almost   pure  gain.     By 
better  feeding  and  breeding  the  weight  of  a  head  of  stock  was 
increased  twofold  or  even  more.     Potatoes  and  other  vege- 
tables   were    introduced    from    America    and    the    Continent. 
Capitalist  farmers  effected  such  a  revolution  in  the  methods 
of  agriculture,  that  pasture  farming  became  relatively  much 
less  important,  and  the  production  of  cereals  increased  so  that 
there  was  a  food  supply  to  maintain  a  manufacturing  popula- 
tion, and  sometimes  a  surplus  for  export. 

241.  Internal  commerce  and  means  of  transportation.  — 
The  conditions  ^f  intern  nl  f»r>mTnpr^p    measured  by  the  diffi- 
culties and  dangers  of  road  transportation,  jwere  still  bad  at 
the  beginning  of  this  period,  but  improved  rapidly  in  the  eigh- 
teenth century.     A  writer  said  in  1767:  "There  never  was  a 
more   astonishing    Revolution   accomplished    in   the    internal 
system  of  any  country  than  has  been  within  the  compass  of 


ENGLAND:  EXPORTS  211 

a  few  years  in  that  of  England.  The  Carriage  of  Grain,  Coals, 
Merchandize,  etc.,  is  in  general  conducted  with  little  more 
than  half  the  Number  of  Horses  with  which  it  formerly  was. 
Journies  of  Business  are  performed  with  more  than  double 
Expedition.  Improvements  in  Agriculture  keep  pace  with 
those  of  Trade."  The  canals,  which  were  extended  rapidly 
after  the  success  of  the  Bridgewater  Canal,  constructed  in 
1758  to  connect  Manchester  with  coal  mines  seven  miles 
distant,  lowered  the  cost  of  transportation  to  one  quarter  or 
less,  in  the  districts  Which  they  served.  As  a  result  manufac- 
turers could  rely  on  a  steady  supply  of  raw  material  for  their 
works,  and  of  food  for  their  employees,  and  had  also  a  chance 
to  put  their  finished  goods  on  the  market.  The  eighteenth 
century ;  moreover,  was  a  period  of  great  development— in 
English  banking,  and  the  extension  of  credit  operations  was 
at  the  same  time  an  effect  and  a  cause  of  the  growth  of  trade. 

242.  JIanufactures ;  advancejFrom  flft  gild  to  the  domestic 
system  and  its  significance.  —  We  turn  now  to  the  history  of 
English  manufactures,  a  topic  which  is  not  only,  as  we  have 
intimated,  of  great  importance  for '  the  growth  of  English 
commerce,  but  which  is  of  general  interest  as  showing  the 
stages  of  development  through  which  other  countries  passed 
later. 

Gilds  still  persisted  in  England,  but  they  had  lost  the  power 
of  control  which  they  had  formerly  had  and  which  they  still 
maintained  on  the  Continent.  The  more  important  industries 
had  passed  into  the  stage  known  as  the  "domestic  system." 
The  change,  at  first  view,  is  not  striking,  for  the  manufacturing 
was  still  done  by  petty  artisans  working  at  home  with  their 
own  tools.  The  ownership  of  the  raw  material,  however,  had 
passed  from  the  artisans  to  an  employer,  who  took  the  risk 
of  the  manufacture  and  reaped  profits  corresponding  to  his 
success  in  conducting  it. 

Brain  power  now  took  a  place  in  manufactures  above  hand 
power.  The  new  class  of  employers  were  men  who  could 
devote  their  energy  entirely  to  studying  the  larger  questions 


212  A   HISTORY  OF  COMMERCE 

of  production.  They  had  the  chance  to  look  away  from  the 
petty  details  of  work,  which  had  for  centuries  absorbed  men's 
attention,  and  to  become  both  broad-sighted  and  far-sighted. 
They  studied  the  needs  of  the  market,  at  home  and  abroad; 
they  bought  the  raw  material  wherever  it  could  be  had  best 
and  cheapest;  and  then  marketed  the  product,  wherever  it 
would  bring  them  the  best  returns. 

243.  The    new    employers   aided    by   the    immigration    of 
foreign    laborers.  —  Success    in    manufacture    still    depended 
largely  on  the  quality  of  labor,  and  one  great  advantage  which 
England  owed  to  her  political  and  religious  freedom  was  the 
immigration  of  skilled  laborers  seeking  refuge  from  the  perse- 
cutions of  the  Continent.     Refugees,  of  whom  the  Huguenots 
from  France  were  the  most  important,  brought  with  them 
improvements  in  the  woolen  manufacture  and  stimulated  the 
development   of  other  industries:   silk,   linen,   cotton,  calico, 
paper,  etc.     It  is,  however,  hard  to  see  how  the  labor  of  these 
people  could  have  had  a  great  effect  in  extending  foreign  trade 
if  they  had  not  been  guided  by  their  employers,  who  were  men 
of  considerable  capital,  'with  broad  views  and  wide  acquaint- 
ance, willing  to  take  large  contracts  and  eager  to  extend  the 
market  for  their  goods.     An  English  pamphlet  of  the  period 
says  that  the  towns  in  which  the  silk  and  cotton  manufactures 
developed  owed  their  industries  "  to  the  public  spirit  of  two  or 
three  men  in   each."     The  development   of  this   process,  by 
which  artisans  lost  their  former  independence  and  came  to 
work  for  an  employer,  can  be  seen  from  a  statement  of  the 
economist  Adam  Smith,  who  wrote  in  1776.     "In  every  part 
of  Europe,"  he  said,  "twenty  workmen  serve  under  a  master 
for  one  that  is  independent."     This  was  not  yet  true  of  "every 
part "  of  Europe,  and  even  in  the  western  states  of  the  Continent 
the  process  had,  not  advanced  so  far  as  in  England,  where  the 
author  had  made  most  of  his  observations. 

244.  Dependence  of  technical  progress  on  the  new  class  of 
employers.  —  It  is  noteworthy  that  the  great   inventions  to 
which  the  modern  development  of  manufactures  has  often 


ENGLAND:  EXPORTS  213 

been  ascribed  could  not  have  been  made  of  practical  impor- 
tance unless  this  system  of  organization  had  developed  pre- 
viously. The  gilds  were  ~  bitterly  opposed  to  any  changes  in 
their  system  of  routine,  and  independent  artisans  would  not 
find  it  worth  their  while  to  introduce  costly  improvements. 
ManyinventiojiflJiad  been  made  before  the  eighteenth  century 
which  would  have  been  of  the  greatest  importance  in  manu- 
facture if  there  had  been  any  one  to  take  them  up  and  put 
them  through;  they  fell  dead,  however,  on  the  world  of  their 
time,  or  were  killed  by  the  opposition  of  petty  producers.  An 
illustration  of  the  way  in  which  premature  inventions  disap- 
peared can  be  given  from  the  experience  of  a  man  who,  to  all 
appearances,  had  devised  a  repeating  firearm  before  the  end 
of  the  sixteenth  century.  A  German  recommended  to  an 
English  statesman  "one  of  his  countrymen,  who  had  invented 
a  harquebuse,  that  shall  containe  ten  balls  or  pelletes  of  lead, 
all  the  which  shall  goe  off,  one  after  another,  having  once 
given  fire,  so 'that  with  one  harquebuse  one  may  kill  ten  theeves 
or  other  enemies  without  recharging."  The  importance  of 
such  an  invention  needs  only  to  be  suggested,  but,  so  far  as 
the  writer  knows,  nothing  further  was  heard  of  it. 

245.  The  domestic  system  preparatory  to  the  great  revolu- 
tion in  manufactures  in  the  eighteenth  century.  —  Not  until  the 
latter  part  of  the  eighteenth  century  were  the  times  ripe  for 
the  great  technical  changes  in  manufacture,  which  the  intro- 
duction of  machinery  implied.  Then  the  advance  came  with 
the  speed  of  revolution.  In  the  lifetime  of  an  ordinary  man 
(1770-1840)  the  whole  face  of  England  changed;  the  great 
textile  towns  and  the  "black  country"  of  the  coal  and  iron 
industry  grew  up;  canals  and  railroads  cut  through  the  agri- 
cultural districts  to  connect  the  industries  with  each  other 
and  with  the  outside  world;  a  social  and  political  revolution 
accompanied  the  economic.  No  attempt  can  here  be  made 
to  describe  the  changes  in  detail,  and  the  discussion  of  the 
factory  system  and  other  features  of  the  present  organization 
to  which  they  gave  rise  can  better  be  postponed.  The  fol- 


214  A  HISTORY  OF  COMMERCE 

lowing  paragraphs  will  suggest  the  development  in  some  of 
England's  chief  export  industries. 

246.  Progress  of  the  cotton  manufacture.  —  The  cotton 
manufacture  was  the  first  to  show  the  possibilities  of  the 
application  of  machinery.  Two  main  processes  are  to  be 
distinguished  in  the  manufacture  of  cotton,  as  in  that  of 
other  textiles;  first,  the  spinning  of  the  yarn  from  the  fiber, 
and  second,  the  weaving  of  the  yarn  into  cloth.  The  first 
great  improvement  was  the  invention  by  Kay  in  1738  of  the 
fly-shuttle,  which  saved  the  time  and  energy  of  the  weaver 
and  enabled  him  to  double  his  output  of  cloth.  Still,  the 
industry  was  small  and  grew  slowly.  The  amount  of  raw 
cotton  imported  from  Turkey  and  the  West  Indies  would  seem 
now  perfectly  insignificant,  and  was  exceeded  by  the  amount 
of  linen  yarn  imported  from  Ireland  alone.  The  cotton  manu- 
facture was  hampered  especially  by  the  slowness  of  cotton 
spinning  (six  spinners  working  with  the  old-fashioned  wheel 
were  needed  to  supply  yarn  to  one  weaver) ;  and  by  the  weak- 
ness of  the  yarn,  which  required  linen  to  be  used  for  the  warp 
of  cloth.  Inventions  which  met  these  difficulties  were  the 
spinning-jenny  of  Hargreaves,  patented  1770,  which  enabled 
a  spinner  to  make  eight  threads  at  once  instead  of  one  (later, 
twenty,  thirty,  even  one  hundred  and  twenty);  and  Ark- 
wright's  roller  spinning  frame,  patented  1769,  which  made 
cotton  yarn  strong  enough  for  warp,  by  stretching  the  strand 
before  it  was  twisted.  Improvements  followed  in  other  pro- 
cesses (carding,  printing,  etc.);  water-power  was  used  more 
generally,  and  a  mere  beginning  made  with  the  application  of 
steam.  A  Kentish  clergyman,  Cartwright,  invented  a  power 
loom  which  greatly  increased  the  possibilities  of  weaving  but 
which  did  not  become  a  practical  success  until  the  nineteenth 
century;  long  after  1800  the  hand-loom  weavers  kept  up  a 
hopeless  struggle  in  competition  with  it. 

The  full  effect  of  all  these  changes  was  not  felt  until  the 
nineteenth  century,  but  their  importance  in  this  period  can  be 
measured  by  the  imports  of  raw  cotton.  In  the  forty-three 


ENGLAND:  EXPORTS  215 

years,  1741-1784,  the  annual  imports  rose  from  4,000  to  28,000 
bales,  while  in  the  sixteen  years  following  they  increased 
to  150,000  bales  (1800). 

247.  ^Slower  development  of  the  woolen  manufacture.  — 
No  such  rapidity  of  development  as  this  can  be  traced  in  the 
woolen  manufacture,  for  it  had  long  been  England's  mainstay, 
and   changed   more  slowly   partly  because   it   was  so  firmly 
established.     Little  by  little,  however,  the  spinning-wheel  was 
displaced  by  the  jenny,  and  other  sources  of  power  than  the 
human  body  were  utilized.     As  in  the  case  of  cotton,  power 
weaving  was  not  important  until  after  1800;  but  the  manu- 
facture of  worsteds   (in  which  the  fibers  are  longer  than  in 
woolens,  and  are  kept  parallel)  was  greatly  helped  by  a  second 
invention  of  Cartwright,  for  wool-combing  by  machinery. 

248.  Development  of  the  iron  mdustry  with  the  use   of 
pit-coal.  —  The  only  other  industry  of  this  period  which  our 
space  allows  us  to  treat  is  that  of  iron.     Until  the  eighteenth 
century  iron  was  made  almost  entirely  by  smelting  with  char- 
coal, the  primitive  process  which  can  be  traced  back  to  pre- 
historic times.     A  ton  of  iron  required  two  loads  of  charcoal, 
and  a  load  of  charcoal  two  loads  of  wood,  so  that  the  industry 
depended  largely  on  the  wood  supply,  and  was  carried  on  at 
petty  forges  scattered  through  England,  but  established  mainly 
in  the  South.     A  large  proportion  of  the  English  iron  supply 
was  imported  from  Sweden.     Coal,  as  we  use  the  word,  called 
then  pit-coal  or  sea -coal,  had  for  centuries  been  mined  for 
domestic  use,  but  had  no  importance  in  manufacture.     Various 
men  tried  to  smelt  iron  by  coal  or  coke,  but  their  experiments 
had  no  practical  result  till  about  1760,  when  blast  furnaces 
using  coal  were  successfully  established,  and  the  industry  began 
a  period  of  rapid  development,  furthered  about  1790  by  the 
application  of  steam-power  to  the  blast.     Henry  Cort  invented 
in  this  period  the  processes  by  which  pig  was  changed  to 
malleable  iron  in  a  coal-puddling  furnace,  and  the  malleable 
iron  was,  worked  into  bars  by  rollers  instead  of  by  the  slow 
action  of  forge  hammers.     The  production  of  iron  had  increased 


216  A   HISTORY  OF  COMMERCE 

fourfold  (17,000  to  68,000  tons)  in  the  period  1740-1788,  and 
in  the  period  of  eight  years  following  nearly  as  much  again 
was  produced  (125,000  tons  in  1796).  The  industries  depend- 
ing on  iron  passed  into  a  new  stage,  and  the  large  export  of 
iron  and  steel  in  1800  is  explained. 

249.  (3)  The  chief  markets  for  England's  exports.  —  The 
market  for  English  wares  varied,  of  course,  according  to  the 
country  to  which  they  were  sent.  The  most  favorable  market 
for  manufactures  was  afforded  by  the  colonies  in  America, 
until  the  outbreak  of  the  war  of  independence.  The  colonists 
were  a  high  grade  of  customers;  they  had  cultivated  tastes 
and  were  willing  to  work  hard  to  gratify  them.  By  reason  of 
natural  conditions  even  more  than  by  legislation  they  found  it 
difficult  to  establish  manufactures,  and  bought  manufactured 
wares  of  England  with  the  raw  products  which  their  environ- 
ment afforded  in  abundance.  A  book  published  just  before 
the  revolution  says  that  the  "colonies  are  furnished  from 
England  with  materials  for  wearing  apparel,  household  furniture, 
silk,  woolen,  and  linen  manufactures,  iron,  cordage,  and  sails, 
great  guns,  small  arms,  ammunition,  lead,  brass,  iron,  and  steel, 
whether  wrought  or  unwrought;  in  a  word  England  furnishes 
them  with  almost  everything  needful  for  the  luxuries,  as  well 
as  conveniences  of  life,  except  provisions." 

In  European  countries  English  manufactures  did  not  find 
such  a  clear  field.  There  were  some  branches  (silk,  linen,  lace, 
paper,  tin-plate,  etc.)  in  which  other  countries  were  distinctly 
superior,  and  no  European  country  depended  on  England  as 
did  the  colonies.  English  woolens,  however,  went  practically 
everywhere,  and  other  products  of  the  textile  and  metal 
industries  were  sure  of  a  ready  market  in  most  countries. 

For  exports  to  other  continents  the  English  had  to  choose 
articles  which  would  stimulate  less  civilized  people  to  produc- 
tion and  exchange.  Very  considerable  sums  in  gold  and  silver 
were  sent  to  Asia,  and  the  half-savage  Africans  were  tempted 
with  gunpowder,  iron,  rum,  spirits,  beads,  etc. 


ENGLAND:   EXPORTS  217 

QUESTIONS  AND  TOPICS 

1.  Endeavor  to  get  a  clear  understanding  of  the  meaning  of  each  of 
the  topics,  and  of  their  bearing  on  each  other,  by  thinking  of  the  present- 
day  commerce  of  the  U.  S.  and  asking  yourself:  what  are  the  main  facts 
about  (1)  our  exports,  (2)  our  natural  advantages,  etc.      Then  ask  your- 
self how  knowledge  of  any  one  of  these  topics  will  be  of  use  to  you  in 
understanding  the  others,  and  so  understanding  commerce  in  general. 
For  instance,  what  bearing  has  our  tariff  policy  on  our  imports  and  ex- 
ports, respectively?     What  are  the  weaker  points  in  our  system  of  pro- 
duction as  shown  by  imports;  what  countries  are  strong  in  those  points? 
The  student  is  most  earnestly  advised  to  learn  the  contents  of  this  manual 
by  understanding  and  not  by  memorizing.     He  should  always  be  asking 
himself:  what  use  is  this  fact  to  me? 

2.  Transform  the  figures,  sect.  239,  into  a  graphic  chart,  and  com- 
pare the  results  with  exports  at  the  present  day.     [See  Statesman's  Year- 
Book  for  recent  figures.] 

3.  Development  of  English  agriculture  in  the  seventeenth  century. 
[Soc.  Eng.,  4:  115-122,  439-445;  Prothero,  *  Pioneers  and  progress  of 
English  farming,  London,  1888.] 

4.  Development    of    agriculture    in    the    eighteenth    century.     [Soc. 
Eng.,  5:  99-110,  301-305,  452^459;  Prothero.] 

5.  Condition  of  English  roads  and  of  carriage  by  land.     [Cunning- 
ham, Growth,  vol.  2,  sect.  232,  and  references  there;  Smiles,  Lives  of  the 
engineers,  vol.  1.] 

6.  Canals,  and  their  benefits.     [Soc.  Eng.,  vol.  5,  pp.  322-326;  Cun- 
ningham and  references.] 

7.  Write  an  essay  on  the  "domestic"  system  of  manufactures,  and 
the  contrast  it  presents  with  earlier  and  later  systems.     [Hobson,  Capi- 
talism, chap.  2,  sect.   11;  Cunningham,   Growth,  vol.  2,  sect.   227  and 
following.] 

8.  The  influence  on  English  industrial  development  of  immigration 
from  the  Continent.     [Cunningham,  Growth,  vol.  2,  sects.  172,  199,  229, 
etc.] 

9.  Compare  with  sect.  244  sects.  283  ff.,  in  the  chapter  on  France, 
to  realize  the  advantages  of  the  English  at  this  period. 

10.  Write  a  report  on  English  manufactures  in  one  of  the  following 
periods,  from  the  descriptions  in  Social  England. 

(a)  Seventeenth  century  [vol.  4,  122-130,  445-^54,  581-588.] 
(6)  Eighteenth  century,  before  the  great  inventions  [vol.  5,  110-117, 
305-322.] 

11.  Write  a  report  on  the  history  of  one  of  the  great  industries  (cotton, 
woolen,  iron),  choosing  one  of  the  following  aspects  of  it:  methods  of  manu- 


218  A   HISTORY  OF  COMMERCE 

facture,  introduction  of  machinery,  change  in  organization  (domestic  and 
factory  system,  etc.),  importance  in  commerce.  [Besides  references  like 
Cunningham  and  Social  England  the  student  will  find  the  encyclopedia 
and  Ure's  Dictionary  of  manufactures  helpful,  and  probably  easier  to 
use.] 

12.  The  great  inventions.    [Social  England,  5:   459-474,  591-604.] 

13.  Write  a  biographical  sketch  of  one  of  the  following  men:  Richard 
Arkwright,  Edmund  Cartwright,  Samuel  Crompton,  James  Watt.    [En- 
cyclopedia;   Dictionary  of  national  biography;    or  one  of  the  popular 
books  on  the  history  of  invention.] 

BIBLIOGRAPHY 

On  the  industrial  revolution  see,  besides  Toynbee,  Charles  Beard, 
*  The  industrial  revolution,  London,  1901,  with  bibliography  of  larger 
works;  Usher,  *  Indust.  hist,  of  Eng.,  chap.  12-14,  treats  the  technical 
changes  in  considerable  detail,  and  gives  further  references  with  brief 
descriptive  notes. 

The  best  study  of  the  earlier  system  of  manufacture  is  George  Unwin, 
Industrial  organization  in  the  sixteenth  and  seventeenth  centuries,  Ox- 
ford, 1904;  but  Hobson's  *  Evolution  of  modern  capitalism,  new  edition, 
1916,  is  better  suited  to  the  needs  of  the  elementary  student. 

On  transportation  there  are  good  brief  and  general  surveys  by  Edwin 
A.  Pratt,  *  History  of  inland  transport  and  communication,  London,  1912, 
and  by  Adam  W.  Kirkaldy  and  A.  D.  Evans,  History  and  economics 
of  transport,  London,  2d  ed.,  1920.  The  most  complete  account  is  pro- 
vided by  W.  T.  Jackman,  *  Development  of  transportation  in  modern 
England,  2  vol.,  continuous  paging,  Cambridge  Univ.  Press,  1916. 


CHAPTER  XXIII 
ENGLAND:  IMPORTS;  SHIPPING;  POLICY 

250.  (4)  Analysis  of  English  imports  in  the  modern  period. 

—  After  this  survey  of  one  side  of  English  trade  we  have  to 
consider  the  other,  the  imports  which  England  purchased  with 
her  surplus  wares.  In  round  millions  of  pounds  the  imports 
at  the  end  of  the  eighteenth  century  were  as  follows,  in  the 
order  of  their  values:  sugar  7.1,  tea  3.1,  grain  2.7,  Irish  linen 
2.0,  cotton  2.3,  coffee  2.2,  wood  1.5,  butter  1.0,  tobacco  1.0, 
hejnp...  l.Q>_  These  wares  amounted  to  more  than  half  of  a 
total  import  of  42.6.  If  the  list  were  extended  to  less  impor- 
tant wares  a  number  of  manufactured  goods  would  be  found 
on  it,  but  these  evidently  could  in  general  be  produced  to 
better  advantage  in  England  than  anywhere  else.  England 
had  already  made  herself  the  "workshop  of  the  world,"  and 
drew  from  other  countries  mainly  raw  materials  and  foods 
which  could  not  be  produced  at  home.  Some  of  the  colonial 
imports  were  shipped  again,  as  will  be  shown  later,  but  a 
large  proportion  of  them  was  consumed  at  home  by  a  popula- 
tion which  was  not  only  growing  in  size,  but  was  enabled  by 
means  of  commerce  to  gratify  its  taste  for  products  com- 
paratively new  (sugar,  tea,  coffee,  tobacco). 

251.  (5)  Sources  of  the   imports.  —  At  the   period  when 
these  figures  were  compiled  war  had  interrupted  the  trade  of 
England   with   France  and   the   Netherlands,    but   an  active 
commerce  still  continued  with  other  parts  of  the  Continent. 
The   imports   from   European   countries   were   largely    minor 
manufactures,  which  do  not  appear  in  the  list  above,  but  raw 
materials  also  were  furnished  by  the  less  advanced  European 

219 


220  A  HISTORY  OF  COMMERCE 

states.     Wool  came  from  Spain;  hemp,  flax,  and  tallow  from 
Russia;  wood,  iron,  and  copper  from  Scandinavia. 

For  some  of  the  most  important  imports  we  must  look  to 
countries  outside  of  Europe.  The  trade  with  Asia  supplied 
all  of  the  tea,  and  part  at  least  of  the  other  commodities  (coffee, 
cotton,  sugar)  which  we  now  associate  with  America,  as  well 
as  a  considerable  amount  of  Indian  manufactures,  especially 
textiles.  This  trade  still  rested  in  the  control  of  the  East  India 
Company,  which  had  grown  to  be  a  great  political  power  in 
Asia,  with  a  government  and  army  of  its  own.  At  home  it 
had  had  a  checkered  career.  As  the  result  of  bitter  attacks 
in  the  seventeenth  century  it  widened  its  membership,  but  it 
still  maintained  the  monopoly  of  trade  with  Asia  till  1793, 
when  it  conceded  to  private  merchants  a  certain  share  in  the 
trade  with  India. 

252.  Peculiar  character  of  the  English  colonies.  —  It  is  to 
the  continent  of  America  that  we  must  turn  for  the  field  outside 
of  Europe  that  in  its  performances  and  in  its  promises  offered 
most  to  English  commerce.     After  the  early  period  of  explora- 
tion,  treasure-hunting,   and    piracy,    English   colonization   in 
America  developed  in  a  form  entirely  its  own.     Emigrants 
went  out,  not  to  seek  gold  mines  or  to  establish  trading  stations, 
but  to  found  homes.     Emigration  was  not  so  much  a  govern- 
ment policy  as  a  popular  movement,  that  attracted  some  of 
the  best  stock  of  English  blood.     There  were  great  differences 
between  the  people  of  the  different  colonies  on  the  Atlantic 
coast,  as  every  student  of  American  history  knows,  and  there 
was  again  a  difference  between  the  colonies  in  the  South  and 
those  on  the  islands.     But  in  general  it  may  be  said  that  no 
European  country  could  vie  with  England  in  the  commercial 
quality  of  its  colonial  population.     Certainly  none  could  rival 
England  in  the  quantity  of  colonists  of  European  stock.     The 
first  census  of  the  United  States  in  1790  showed  a  population 
(nearly  four  million),  merely  in  this  group  of  former  English 
colonies,  amounting  to  nearly  half  that  in  England  and  Wales. 

253.  Resources  and  industries  of  the  colonies  in  America.  — 


ENGLAND:  IMPORTS;   SHIPPING;  POLICY  221 

Though  the  personal  qualities  of  the  English  were  duplicated 
on  the  other  side  of  the  Atlantic,  the  physical  environment 
was  absolutely  different.  Products  of  the  field,  the  forest,  and 
the  sea,  which  were  eagerly  desired  and  hard  to  get  in  England, 
were  to  be  had  in  abundance  in  the  New  World.  The  condi- 
tions for  manufacture,  on  the  other  hand,  were  unfavorable; 
capital  and  labor  found  such  an  attractive  field  in  the  extractive 
industries  (the  production  of  raw  material),  that  there  was 
little  temptation  for  the  colonies  to  engage  in  the  finishing  of 
goods.  In  the  plantation  colonies  of  the  South  and  the  islands 
almost  nothing  was  manufactured.  Even  in  the  center  and 
North,  where  the  difficulties  of  life  and  the  talents  of  the 
people  made  manufacture  more  practicable,  most  industries 
were  of  a  household  character,  rough  clothing  and  implements 
being  made  in  the  spare  hours  at  home;  or  were  ordinary 
village  trades,  —  milling,  tanning,  etc.  All  the  fine  manufac- 
tures were  bought  from  England  with  raw  or  semi-raw 
products. 

254.  Specialties  of  different  colonies.  —  The  island  colonies 
(Jamaica,    Barbadoes,    etc.)    sent    plantation    products.     The 
sugar-cane  supplied  sugar   and    molasses    and,  by   a    simple 
process  of  manufacture,  rum.     American  cotton  until  Whitney's 
invention  of  the  cotton-gin  in  1793  came  almost  entirely  from 
the  islands,  and  indigo  and  various  drugs  were  secured  from 
the  same  source.     The  colonies  on  the  mainland  supplied  a 
greater  variety  of  products,  by  reason  of  their  climatic  differ- 
ences.    Nearly  all  of  them  contributed  to  the  supply  of  skins 
and  furs;  and  lumber  and  naval  stores  (pitch,  tar,  turpentine) 
were  secured  from  the  forests  all  the  way  from  New  England 
to  Georgia.     Different  sections,  however,  had  their  specialties; 
the  Carolinas  sent  rice,  Virginia  tobacco,  New  England  codfish 
and  whale-oil. 

255.  Commerce  with  Africa.  —  There  was  a  marked  pecu- 
liarity  in  the  commerce  with   Africa.     Thejexportsto  this 
country  always  exceeded  the  direct  imports~by  a  consHerable 
sum.     An  English  writer  of  the  eighteenth  century  tells  about 


222  A  HISTORY  OF  COMMERCE 

the  manufactures  which  were  sent  out,  and  continues:  "we 
have,  in  return,  gold,  teeth  (i.e.,  ivory),  wax,  and  negroes; 
the  last  whereof  is  a  very  beneficial  traffic  to  the  kingdom,  as 
it  occasionally  gives  so  prodigious  an  employment  to  our  people 
both  by  sea  and  land."  His  meaning  is  this:  the  slave  trade 
was  so  "beneficial"  because  the  slaves  which  were  purchased 
with  beads  and  rum  were  not  brought  to  England  but  shipped 
to  the  American  colonies  where  they  were  put  to  work.  The 
English  figured,  therefore,  that  they  got  not  only  the  price  of 
the  slaves  in  American  products,  but  also  had  the  business  of 
carrying  them  to  America,  and  could  hope  for  a  future  return 
from  their  labor  in  the  field.  It  is  estimated  that  20,000  slaves 
a  year  were  sent  out  during  the  eighteenth  century,  and  the 
chief  port  of  the  trade,  Liverpool,  employed  190  ships  as 
slavers  in  1771. 

256.  (6)  Shipping  and  the  carrying  trade.  —  At  the  begin- 
ning of  the  period  which  we  are  studying   (1500-1600)   the 
English,  as  we  have  seen,  were  emancipating  themselves  from 
their  former  dependence  on  foreign  ships.     In  the  course  of 
the  period  they  learned  to  carry  not  only  their  own  goods  but 
those  of  other  nations  as  well,  and  took  from  the  Dutch  the 
leadership  in  the  carrying  trade  of  the  world.     The  reader  will 
note,  if  he  refers  to  the  figures  showing  the  trade  of  England 
about  1800,  that  the  imports  amounted  to  about  42  million 
pounds,  while  the  exports  of  British  merchandise  were  but 
29  millions.     England  would  seem  to  have  been  gaining  a 
great  amount  of  goods  for  nothing,  or  to  have  been  going  in 
debt  for  them.     The  difference  is  to  be  explained  in  part  by 
the  earnings  of  English  freight,  which  other  countries  paid  in 
wares,  but  in  the  larger  part  by  the  export  of  goods  which 
were  brought  to  England  from  other  countries  merely  to  be 
transshipped  and  exported  again.     At  the  close  of  the  century 
foreign   merchandise  to  the   value   of  over   11    millions  was 
exported,,   the   wares   being   mainly   those   of   colonial   origin 
(coffee,  sugar,  Indian  textiles,  tobacco,  tea,  indigo,  etc.). 

257.  Struggle  of  English  seamen  and  government  with  the 


ENGLAND:  IMPORTS;  SHIPPING;  POLICY  223 

Dutch.  —  Two  separate  sets  of  forces  were  at  work  to  raise  the 
English  merchant  marine,  those  of  individuals  and  those  of 
the  government.  The  English  in  the  seventeenth  century 
could  not  navigate  as  cheaply  as  the  Dutch,  since  they  re- 
quired larger  crews  for  the  same  work,  but  they  seem  in  the 
eighteenth  century  to  have  been  abreast  or  ahead  of  the  gen- 
eral development  of  navigation;  and  unusual  facilities  for 
ship-building  were  offered  to  them  in  their  American  colonies. 
The  government,  on  the  other  hand,  was  eager  to  foster  every 
effort  to  extend  English  shipping,  not  only  because  of  its 
economic  advantage,  but  because  of  the  addition  to  the  naval 
resources  of  the  kingdom  in  war  with  other  powers.  Until 
after  1650  the  English  merchant  marine,  in  spite  of  individuals 
and  government,  was  greatly  inferior  to  the  Dutch.  State- 
ments which  are  doubtless  exaggerated  give  us  still  some 
measure  of  the  difference;  the  Dutch  were  said  to  own  four 
fifths  of  all  the  ships  engaged  in  oceanic  commerce,  or  as  many 
as  eleven  kingdoms  of  Christendom;  ten  Dutch  ships  traded 
to  Barbadoes  for  one  English.  The  latter  half  of  the  seven- 
teenth century  is  filled  with  a  bitter  struggle  for  supremacy 
between  the  English  and  the  Dutch,  waged  with  all  the  weapons 
both  of  peace  and  war. 

268.  The  Navigation  Acts;  victory  of  English  over  Dutch 
shipping.  —  "The  first  nail  in  the  coffin  of  Dutch  greatness," 
says  an  English  historian,  was  the  Navigation  Act  passed 
under  Cromwell  in  1651.  This  was  but  one  of  a  series  of 
measures  extending  before  and  afterward,  designed  to  further 
the  English  carrying  trade  at  the  expense  of  rivals.  Briefly, 
goods  from  a  European  country  could  be  brought  to  England 
only  in  English  ships  or  in  ships  of  the  country,  so  that,  for 
instance,  the  Dutch  could  not  carry  Baltic  wares  to  England; 
while  the  products  of  other  continents  could  be  imported  or 
exported  only  in  English  ships;  and  some  wares  that  were 
enumerated  (sugar,  tobacco,  etc.).  must  be  brought  to  England 
before  they  could  be  exported  to  any  other  European  country. 
To  maintain  this  policy  the  English  engaged  in  a  long  contest 


224  A  HISTORY  OF  COMMERCE 

with  smugglers  in  America,  and  fought  several  great  naval 
wars  with  the  Dutch.  The  result  was,  as  we  have  seen,  a 
victory  for  English  commerce  over  the  Dutch,  though  it  is 
hard  to  say  how  much  credit  should  be  given  the  government 
policy,  and  how  much  was  due  to  the  energy  of  the  individuals 
who  were  building  up  English  business  at  this  period. 

The  effect  of  the  new  oceanic  trade  was  to  build  ujp  the^pqrts 
in  the  West;  Liverpool  came  into  prominence  in  the  eighteenth 
century,  and  Bristol  also  grew.  The  distribution  of  trade 
among  the  ports  did  not,  however,  change  greatly.  An  esti- 
mate of  the  eighteenth  century  gave  to  London  still  two  thirds 
of  the  total,  while  the  remaining  third  was  divided  in  equal 
parts  among  the  ports  of  the  east,  the  south,  and  the  west 
coasts. 

269.  (7)  Government  policy.  Commerce  and  war.  —  Just 
as  in  shipping,  so  in  other  commercial  interests,  the  efforts  of 
individuals  to  make  money  for  themselves  were  restrained  or 
furthered  by  government  regulations  aiming  to  advance  the 
English  people  as  a  whole.  Every  matter  of  commerce  was 
at  the  same  time  a  matter  of  politics.  Mention  was  made  in 
an  introductory  chapter  of  the  part  played  by  England  in  the 
great  wars  of  the  period.  It  will  be  remembered  that  English 
policy  in  general  was  characterized  by  a  shrewd  recognition  of 
the  commercial  advantages  to  be  gained  in  war,  either  by 
territorial  acquisitions  or  by  trading  privileges,  and  every  war  in 
which  England  engaged  ended,  as  a  rule,  with  a  treaty  that 
gave  her  some  new  colonial  market  or  some  advantages  in 
trade  with  a  European  country.  England  fought  France  con- 
sistently, not  because  of  old  traditions  of  enmity,  but  because 
France  was  a  commercial  rival,  refusing  English  manufactures 
and  attempting  to  market  her  own  in  England,  and  because 
France  had  possessions  in  America  and  India  that  England 
desired.  England  allied  herself  with  Portugal,  on  the  other 
hand,  because  the  trade  of  the  two  countries  was  complemen- 
tary rather  than  competitive. 

260.  Customs  policy.  —  The  customs  policy  of  the  period 


ENGLAND:  IMPORTS;  SHIPPING;  POLICY  225 

was  governed  by  mercantilist  ideas,  described  in  an  earlier 
chapter.  The  government  drew  a  considerable  portion  of  its 
revenue  from  the  customs  duties,  but  nevertheless  subordinated 
the  collection  of  revenue  to  other  considerations  in  framing 
the  tariff,  and  regarded  it  chiefly  as  a  means  of  building  up 
national  power  in  contest  with  other  states.  To  further  this 
end  the  importation  of  manufactured  wares  was  in  many  cases 
taxed  or  prohibited,  that  foreigners  might  not  draw  money 
for  work  which  Englishmen  were  thought  competent  to  do. 
Raw  materials,  like  wool,  which  could  be  used  as  the  basis  of 
English  industries,  were  kept  in  the  country  by  duties  or 
prohibitions  on  export;  while  the  export  of  other  wares,  which 
put  foreigners  in  debt  to  England,  was  encouraged.  Other 
measures,  now  inconceivable,  were  designed  to  stimulate  cer- 
tain industries ;  an  Englishman  could  be  buried  only  in  a  woolen 
shroud;  a  Scotchman  only  in  Scotch  linen;  buttons  and  button- 
holes were  regulated  by  legislation;  English  ships  must  carry 
English  sails. 

261.  Burden  of  the  tariff.  —  In  a  sense  it  is  wrong  to  speak 
of  any  "system"  of  customs  policy  at  this  time,  for  the  tariff, 
by  constant  changes,  had  become  extraordinarily  confused, 
and  included  many  inconsistencies.  "The  collection  and  ad- 
ministration of  such  a  complicated  system  was  most  wasteful; 
while  the  taxes,  when  taken  together,  were  so  high  as  to  inter- 
fere seriously  with  the  consumption  of  the  article  and  to  offer 
a  great  temptation  to  the  smuggler."  The  most  rigorous 
measures  failed  to  stop  the  smuggling  which  brought  into 
England  a  large  proportion  of  the  goods  on  which  duties  or 
prohibitions  were  imposed.  Reforms  attempted  by  different 
statesmen  alleviated  to  some  extent  the  burden  of  the  tariff 
on  merchants,  but  left  it  still  so  heavy  and  cumbrous  that 
with  the  advances  of  the  nineteenth  century  it  was  felt  to  be 
intolerable.  In  this  period  almost  no  one  thought  of  free 
trade.  The  tariff  undoubtedly  stimulated  the  growth  of  certain 
industries  (silk,  for  example),  but  it  is  noteworthy  that  the 
cotton  industry,  which  was  destined  to  become  the  most  im- 


226  A  HISTORY  OF  COMMERCE 

portant  of  any  in  England,  grew  up  not  only  without  any 
favor  but  under  actual  discouragements. 

262.  Colonial  policy.  —  An  English  historian  who  has  been 
quoted  several  times  before  said  that  England  "  conquered  and 
peopled  half  the  world  in  a  fit  of  absence  of  mind,"  implying 
that  the  movement  was  one  of  natural  expansion  rather  than 
of  conscious  policy.     This  seems  true  when  we  contrast  English 
colonization  with  that  of  other  powers.     Still,  the  government 
held  from  the  first  the  idea  that  the  colonies  were  a  part  of  the 
home  country,  and  should  contribute  in  special  ways  to  its 
advancement,  and  these  ideas  grew  stronger  and  took  more 
definite  form  as  the  colonies  grew  in  size.     The  government 
permitted  the  movement  of  men  and  capital  to  America  under 
the  condition  that  the  resources  of  the  colonies  should  be  made 
to  supplement,  not  compete  with,  the  resources  of  the  mother 
country.     We  have  to  note  here  the  regulations  in  which  the 
government  ideas  were  embodied. 

263.  Restrictions  on  colonial  enterprise,  regarded  as  jus- 
tifiable at  the  time.  —  By  the  application  of  the  Navigation 
Acts  the  colonists  were  required  to  employ  English  ships  for 
their  commerce,  and  to  send  certain  enumerated  wares  of  their 
production  to  England  before  they  could  be  disposed  of  to 
another  county ;  and  by  other  acts  they  were  restricted  in 
the  manufacture  or  exchange  of  certain  articles  (woolens,  hats, 
bar-iron,  and  steel)  for  which  English  manufacturers  desired 
to    reserve   the   market.     Aside   from   these   restrictions   the 
colonists  were  left  free  to  produce  and  to  trade  as  they  pleased. 
They  paid  the  usual  duties,  as  a  rule,  on  wares  entering  the 
English  ports,  but  were  allowed  a  drawback  when  the  wares 
were  exported  again. 

Comparing  these  restrictions  with,  for  instance,  those  of 
Spain,  we  are  struck  with  their  liberality;  still  more  so  when 
it  is  added  that  the  government  gave  some  special  favors  to 
the  colonists  in  the  form  of  bounties,  and  colonial  ships  were 
put  on  an  equal  footing  with  those  built  at  home,  so  that  New 
England  was  a  great  gainer  by  the  stimulus  to  ship-building 


ENGLAND:  IMPORTS;  SHIPPING;  POLICY  227 

and  sailing.  England  was  the  natural  market  for  most  of  the 
colonial  wares,  and  the  colonists,  as  we  have  seen,  had  few 
temptations  to  go  into  manufacturing.  None  of  these  restric- 
tions, therefore,  bore  with  great  weight  on  the  colonists,  and 
an  attempt  to  interfere  in  their  trade  with  the  French  West 
Indies  (by  the  Molasses  Act  of  1733)  was  evaded.  The  English 
colonial  system  was  accepted  as  natural  and  reasonable  by  the 
colonists  in  general  until  shortly  before  the  Revolution. 

QUESTIONS  AND  TOPICS 

1.  Make  a  graphic  chart  of  imports  and  compare  with  present  con- 
ditions, as  suggested  above  under  exports. 

2.  Insert  the  wares  named  in  251  and  the  following  sections  in  the 
chart  of  imports  according  to  continents,  sect.  237. 

3.  History  of  the  East  India  Company  in  the  eighteenth  century. 
[Cunningham,   Growth;   B.   Willson,  Ledger  and  sword,  London,    1903, 
vol.  2.] 

4.  Compare  the  colonial  market  of  England  with  that  of  Spain  (see 
chap.  20)  and  that  of  France  (see  chap.  25). 

5.  Write  a  report  on  the  economic  and  commercial  characteristics 
of  one  of  the  thirteen  colonies,  in  the  period  preceding  the  Revolution. 
[See  the  chapters  describing  the  condition  of  the  separate  colonies  in  1765, 
in  Lodge,  English  colonies,  N.  Y.,  Harper,  1881,  $3.] 

6.  English  imports  of  naval  stores,  and  schemes  to  stimulate  exports 
from  America.     [Lord,  Industrial  exper.,  part  2.] 

7.  Write  a  report  on  the  commercial  history  of  one  of  the  island 
colonies,   (a)    Jamaica,  or    (6)    Barbadoes.     [See  encyclopedia,  and  ref- 
erences there;  R.  Montgomery  Martin,  History  of  the  British  colonies, 
London,  1834,  vol.  2,  chap.  2,  Jamaica;  chap.  7,  Barbadoes,  chap.  16, 
West  Indian  commerce;  Amos  K.  Fiske,  West  Indies,  N.  Y.,  Putnam, 
1899,  $1.50,  chaps.  18-19,  Jamaica;  chap.  37,  Barbadoes.] 

8.  History  of  the  African  trading  companies.     [Cunningham,  Growth, 
vol.  2,  sect.  194.] 

9.  History  of  the  slave  trade.      [Cunningham,  index,  and  references 
in  his  notes;  Weeden,  index;  Encyc.  Brit.] 

10.  The  plantations,  the  Royal  African  Company  and  the  slave  trade, 
1672-1680.     [E.  D.  Collins,  in  Rep.  of  Amer.  Hist.  Assoc.,  1900,  Washing- 
ton, 1901,  vol.  1,  pp.  139-192.] 

11.  History  of  the  merchant  navy;  development  of  ship-building  and 
navigation.     [See  the  articles  on  the  Navy,  by  W.  Laird  Clowes,  Soc. 
Eng.,  vols.  3,  4,  5.    The  student  should  endeavor  to  extract  from  these 


228  A   HISTORY  OF  COMMERCE 

articles,  which  are  rather  fragmentary,  only  those  facts  which  bear  on  the 
merchant  marine,  and  should  guard  against  confusing  this  with  the  war 
navy.] 

12.  Write  an  essay  on  the  colonial  and  commercial  aspects  of  Crom- 
well's foreign  policy.     [Reference  may  be  made  to  the  following,  among 
the  biographies  of  Cromwell:  F.  Harrison,  Lond.  1888,  chap.  13:  Firth, 
N.  Y.  1900,  chap.  19;  John  Morley,  N.  Y.  1900,  book  5,  chap.  8;  Roosevelt, 
N.  Y.  1900,  p.  225  ff.     See  also  Frank  Strong,  The  causes  of  Cromwell's 
West  Indian  expedition,  Amer.  Hist.  Review,  Jan.,   1899,  4:  228-245; 
George  L.  Beer,  Cromwell's  economic  policy,  Polit.  Sci.  Quarterly,  1901, 
16:  582-611;  1902,  17:  46-70.] 

13.  Of  what  country  would  ships  have  to  be,  according  to  the  Naviga- 
tion Acts,  to  carry:  wool  from  Spain;  gold  from  Africa;  spices  from  India; 
furs  from  America? 

14.  The  policy  of  the  Navigation  Acts  and  their  effects.     [Cunning- 
ham, Growth,  vol.  2,  sects.  204,  222.] 

15.  Rise  of  the  port  of  Liverpool.     [Encyc.,  and  references  there.] 

16.  Report  on  one  of  the  three  commercial  treaties,  of  1703,  of  1713, 
and  of  1786,  as  illustrating  the  policy  of  the  period.     [Hewins,  English 
trade,  chap.  5.] 

17.  Abuses  of  the  customs  duties,  and  the  reform  by  the  younger  Pitt. 
[Lecky,  Hist.,  chap.  16,  Cabinet  ed.,  5:  295  ff.] 

18.  The  commercial  legislation  of  England  and  the  American  colonies, 
1660-1760.     [See  the  article  with  that  title  by  W.  J.  Ashley,  Quarterly 
Journal  of  Economics,  1899-1900,  14:  1-29;  republished  in  his  Surveys, 
London.,  1900. 

19.  American  smuggling,  1660-1760:  to  what  extent  was  it  practised; 
does  it  prove  the  English  policy  to  have  been  oppressive?  [Ashley,  Surveys, 
336-360.] 

BIBLIOGRAPHY 
See  chapter  xxi. 


CHAPTER  XXIV 
FRANCE:  SURVEY  OF  COMMERCIAL  DEVELOPMENT 

264.  Natural  advantages  of  France  in  the  modern  period.  — 

In  preceding  sections  we  have  considered  countries  which  for 
a  time  took  the  leading  place  in  commerce  among  the  states 
of  Europe.  We  have  now  to  study  the  development  of  the 
other  states,  to  understand  the  share  they  took  in  commerce, 
and  to  note  so  far  as  possible  the  causes  which  kept  them 
below  the  leaders. 

Taking  first  France,  we  find  a  country  which  throughout 
the  period  enjoyed  the  reputation  of  being  the  richest  state 
of  Europe.  Not  only  in  area  and  population  did  it  greatly  - 
eltceecTTts  traditional  rival,  England;  it  had  also  advantages 
of  soil  and  climate  which  caused  it  to  be  regarded  as  favored 
beyond  all  others.  Fronting  both  the  Mediterranean  and 
Atlantic,  with  easy  access  to  the  North  Sea  and  Baltic,  it  had 
a  better  position  for  the  sea  commerce  of  the  period  than  any 
other  country,  while  internal  transportation  was  facilitated 
by  a  remarkable  system  of  navigable  rivers,  that  brought  the 
interior  of  the  country  into  easy  communication  with  the 
coast.  Nor  can  we  say  that  the  French  people  of  this  period 
were  inferior  to  those  of  other  countries  in  their  economic 
capacity.  Before  the  beginning  of  the  period  and  at  intervals 
during  its  course  they  give  evidence  of  productive  ability 
which  would  have  led  to  very  different  results  under  conditions 
such  as  more  favored  people,  like  the  English,  enjoyed.  This 
holds  true  even  of  manufacturing,  a  branch  of  production  in 
which  the  French  have  commonly  been  considered  inferior  by 
natural  bent  to  the  English. 

265.  The  chief  reason  why  France  did  not  rise  to  leadership. 

229 


230  A   HISTORY  OF  COMMERCE 

—  In  spite  of  size,  resources,  and  population,  France  did  not 
rise  above  the  second  place  mainly  through  the  fault  o|__thfi— 
French  organization,  the  arrangements  that  the  French  nation 
had  for  working  together.  We  may  compare  the  French  state 
to  a  modern  industrial  corporation,  which  has  a  large  capital 
invested  in  a  valuable  plant,  and  has  good  business  openings; 
but  in  which  the  business  is  wrecked  by  quarrels  among  the 
stockholders,  and  by  such  a  poor  organization  that  president 
and  directors  can  disregard  the  interests  of  the  stockholders, 
can  conduct  affairs  for  their  selfish  profit,  and  can  waste  the 
company's  resources  in  enterprises  that  do  not  pay.  The 
point  will  be  made  more  clear  if,  as  an  introduction  to  the 
history  of  commerce  in  France,  we  sketch  the  general  history 
of  the  country  from  the  later  Middle  Ages  to  the  French 
Revolution  of  1789. 

266.  Progress  checked  by  the  Hundred  Years'  War  with 
England,  and  by  religious  conflicts.  —  In  the  fourteenth  century 
it  seemed  as  though  France  were  going  to  lead  Europe  in  the 
development  of  a  new  period.  Agriculture  and  manufactures 
were  flourishing;  internal  trade  was  active;  and  French  ship- 
owners, growing  accustomed  to  longer  voyages,  ventured  far 
down  the  west  coast  of  Africa  and  established  trading  stations 
even  on  the  coast  of  Guinea.  The  country  was  plunged  again 
into  a  condition  of  medieval  chaos  by  the  Hundred  Years'  War 
(1336-1453),  a  war  that  hurt  France  vastly  more  than  England 
because  it  was  fought  entirely  on  French  soil.  French  and 
English  armies,  and  "free  companies"  of  organized  bandits 
ravaged  the  country;  the  weight  of  taxes  grew;  trade  dwindled, 
cities  declined,  and  artisans  emigratecl. 

The  country  had  hardly  recovered  from  this  war  (which 
ended  in  1453),  when  it  was  again  disturbed,  this  time  by  a 
series  of  civil  wars  between  Protestants  and  Catholics,  attended 
by  the  same  unfortunate  economic  effects.  The  religious  con- 
flict was  finally  closed  by  a  settlement  which  was  even  more 
disastrous;  the  French  Protestants,  to  the  number  of  nearly 
half  a  million  and  making  up  the  most  valuable  industrial 


FRANCE:  SURVEY  OF  COMMERCIAL  DEVELOPMENT      231 

element  in  the  population,  were  expelled  from  France  as  thfl 
Jews  and  Moriscoes  had  been  expelled  from  Spain.  The  loss 
to  France  can  be  measured  by  the  gain  of  other  countries;  the 
establishment  and  development  of  important  manufactures  can 
be  traced  in  each  of  three  countries,  England,  Prussia,  and  the 
Netherlands,  to  the  influx  of  the  Huguenot  refugees. 

267.  Effect  of  the  absolute  monarchy  on  French  develop- 
ment. —  France  secured  finally  freedom  from  foreign  invasion 
and   from  internal   dissension,   but   at   a  terrible  cost.     The 
whole  power  of  the  state  was  vested  in  the  hands  of  the  king. 
The  stockholders  lost  all  power  to  direct  the  concerns  of  the 
company.     Rarely  this  power  was  exercised  by  a  king  both 
wise  and  strong,  like  Henry  IV.     During  the  long  reign  of 
Louis  XIV  it  was  wielded  by  a  king  who  was  strong  but  who 
was  not  wise;  who  wasted  the  rich  resources  of  his  country  in 
fruitless  wars,  while  he  neglected  the  opportunities  for  reforms 
at  home  and  for  commercial  expansion  abroad.     Too  often 
the  rule  was  held  only  in  name  by  the  king,  but  in  fact  by  the 
royal  favorites,  worthless  adventurers  who  by  pleasing  the  taste 
of  the  sovereign  gained  the  power  to  direct  as  they  chose  the 
policy  of  this  great  country.     This  evil  is  especially  marked 
in  the  eighteenth  century,  when  England  was  prepared  to  take 
advantage  of  every  mistake  of  France,   in  building  up  her 
world  power. 

268.  Failure  to  reform  conditions  inherited  from  the  feudal 
period.  —  The  absolute  monarchy  played  a  vital  part  in  the 
history  of  French  commerce,  not  only  by  its  disregard  of  com- 
mercial interests  abroad,  but  by  its  lack  of  business  sense  in 
home  affairs.     As  the  details  will  appear  in  the  following  pages 
it  is  necessary  here  to  call  attention  only  to  some  general 
points.     The  kings  did  not  complete  the  unification  of  the 
country  by  breaking  down  the  feudal  toll  barriers,  of  which 
some  remained  until  the  Revolution.     They  encouraged  the 
separation  of  classes,  just  as  they  allowed  the  separation  of 
sections;  the  French  were  split  into  groups,  mutually  jealous 
and  hostile,  which  lacked  the  feeling  of  common  interest,  and 


232  A  HISTORY  OF  COMMERCE 

were  unable  to  cooperate.  The  most  serious  distinction  be- 
tween classes  was  in  regard  to  taxation.  Nobles  and  clergy 
were  granted  privileges,  often  of  a  kind  that  hindered  produc- 
tion, while  they  paid  very  little  to  the  public  treasury.  The 
productive  classes,  on  the  other  hand,  the  business  men  and 
laborers,  bore  nearly  the  whole  burden.  The  weight  of  this 
burden  was  tremendous,  for  the  machinery  of  government  had 
become  more  and  more  complicated  and  more  and  more  in- 
efficient with  the  passage  of  time,  so  that  the  government  had 
to  demand  a  great  deal  from  the  taxpayers  to  accomplish  very 
little  in  the  public  service.  An  idea  of  the  condition  in  the 
eighteenth  century  can  be  gathered  from  the  fact  that  the 
peasant  is  estimated  to  have  paid  from  one  half  to  four  fifths 
of  his  gross  income  to  a  government  which  gave  him  almost 
nothing  in  return. 

269.  Bloom  of  French  commerce  in  the  fifteenth  century  as 
shown  in  the  business  of  Jacques  Coeur.  —  Returning  now  from 
this  political  survey  to  the  history  of  commerce  proper,  we 
find  before  the  year  1500  one  name  standing  out  prominently 
in  the  history  of  French  commerce,  that  of  Jacques  Co3ur,  a 
merchant  of  Bourges.  A  contemporary  says  of  him:  "His 
ships  carried  to  the  East  the  cloths  and  merchandise  of  the 
kingdom.  On  their  return  they  carried  back  from  Egypt  and 
the  Levant  different  silk  stuffs,  and  all  kinds  of  spices.  On 
their  arrival  in  France  some  of  these  ships  ascended  the  Rhone, 
while  others  went  to  supply  Catalonia  and  the  neighboring 
provinces,  competing  in  this  way  with  the  Genoese  and  the 
Catalonians  in  a  branch  of  trade  that  up  to  that  time  they 
alone  had  exploited."  At  the  height  of  his  fortunes,  about 
1450,  he  had  a  silk  factory  in  Florence,  did  business  with 
England  and  thought  of  establishing  an  office  in  Flanders  also. 
The  work  of  Cceur  survived  him,  and  French  commerce  devel- 
oped rapidly  in  the  intervals  of  peace  following.  Great  interest 
was  felt  in  France  in  the  explorations  of  the  sixteenth  century, 
and  though  the  French  were  behind  the  Spanish  and  Portu- 
guese in  the  work,  they  led  the  English  and  Dutch,  and  the 


FRANCE:   SURVEY  OF  COMMERCIAL  DEVELOPMENT   233 

names  of  Verrazano  (an  Italian  in  the  French  service)  and 
Cartier  testify  to  their  energy. 

270.  The  bulk  of  French  commerce  still  with  nearby  coun- 
tries. —  France  was  still  unprepared,  however,  to  engage  ex- 
tensively in  oceanic  commerce.     The  chief  part  of  its  trade 
in  the  sixteenth  century  was  with  its  immediate  neighbors; 
it  found  the  best  market  for  its  exports  in  Spain,  and  it  sought 
a  large  part  of  its  imports  in  Italy.     French  military  expedi- 
tions to  Italy  about  1500  had  far  more  effect  at  the  time  than 
the  discovery  of  the  New  World  or  of  the  sea  route  to  India; 
the  Italians  stimulated  and  gratified  new  tastes  and  introduced 
new  methods  in  business.     The  best  days  of  the  Levant  trade 
had  passed  away,  but  the  number  of  French  ships  engaged  in 
it  increased  rapidly,  until  the  outbreak  of  the  religious  wars 
at  home.     France  shared  with  Venice  the  profits  of  its  trade, 
and  was  the  first  of  the  European  states  to  secure  from  the 
Sultan  at  Constantinople  a  "capitulation"  in  the  modern  form, 
defining  the  condition  on  which  foreigners  could  trade. 

271.  Decline  during  the  period  of  the  religious  wars.  —  The 
promising  development  was  checked  by  the  religious  wars  of 
the  later  sixteenth  century;  France  must  endure  a  period  of 
anarchy  at  home  and  powerlessness  abroad.     French  commerce 
declined   at   its   source,   as   production   languished;  and   was 
attacked  abroad  by  competitors  and  by  the  pirates  who  in- 
fested the  coasts.     About  1600  the  French  merchant  marine 
had  almost  disappeared  from  the  Atlantic;  voyages  to  foreign 
lands  had  ceased,  and  even  the  coasting  trade  had  passed  into 
the  hands  of  the  English,   Flemish,  and   Dutch.     Marseilles 
still  maintained  relations  with  the  Levant,  but  the  French 
merchants  there  were  being  mercilessly  bled  by  Turkish  gov- 
ernors, and  were  being  rapidly  driven  out  of  the  market  by 
the  English  and  Dutch.     France  seemed  actually  saved  from 
ruin  by  the  few  years  of  peace  and  good  government  given  by 
Henry  IV  and  his  minister  Sully. 

272.  Recovery  after  1600.  —  The  first  three  quarters  of  the 
seventeenth    century,   until    the    disastrous    foreign    wars   of 


234  A    HISTORY  OF  COMMERCE 

Louis  XIV,  were  on  the  whole  a  period  of  peace  and  progress, 
Under  Henry  IV  taxes  were  low,  the  means  of  internal  com- 
munication by  land  and  water  were  restored  and  improved, 
and  new  industries  were  introduced.  The  revival  of  trade 
was  shown  in  the  prosperity  of  fairs.  The  great  foreign  min- 
ister, Richelieu,  was  interested  mainly  in  questions  of  politics, 
and  hampered  the  development  of  French  resources  by  heavy 
taxes,  but  in  some  ways  he  continued  the  work  of  Henry  IV. 
The  English  of  this  period  called  themselves  "Kings  of  the 
Sea"  and  termed  Richelieu  a  "fresh-water  admiral";  French 
ships,  afraid  to  refuse  the  English  a  salute  and  unwilling  to 
accord  it,  sailed  under  the  Dutch  flag.  Richelieu  said,  in  the 
government  newspaper,  "France,  bounded  by  two  seas,  can 
maintain  herself  only  by  sea  power,"  and  began  the  construc- 
tion of  a  navy  which  would  give  confidence  to  the  merchant 
marine. 

273.  Founding  of  commercial  companies,  and  colonial  ex- 
pansion. —  The  revival  of  French  commerce  was  evidenced 
by  the  incorporation  of  companies  designed  to  trade  with 
distant  parts  of  the  world,  and  by  the  encouragement  and 
growth  of  colonization.  The  list  of  commercial  companies 
founded,  1599-1642,  including  reorganizations,  amounted  to 
twenty-two,  including  in  its  scope  Canada,  the  West  Indies, 
Guinea,  the  west  coast  of  Africa,  Madagascar,  East  India, 
and  the  Malay  Archipelago  (Java,  etc.).  The  government 
accorded  great  privileges  to  the  companies,  and  the  royal 
influence  was  exerted  in  every  way  to  help  them;  men  were 
forced  even  by  intimidation  to  invest  in  them,  and  nobles 
were  allowed  to  participate  without  lowering  the  dignity  of 
their  order.  The  colonies  were  likewise  pushed  by  the  force 
of  the  government;  emigration  was  encouraged  and  discharged 
soldiers  and  poor  girls  were  sent  out  by  the  government  to 
further  the  growth  of  population.  The  number  of  Europeans 
in  Canada  was  perhaps  2,500  in  1660,  and  increased  to  10,000 
in  the  next  twenty  years;  a  considerable  number  of  French 
settled  also  in  various  islands  of  the  West  Indies.  France 


FRANCE:  SURVEY  OF  COMMERCIAL  DEVELOPMENT       235 

stood  next  to  Spain  as  a  colonial  power,  measuring  merely  by 
the  area  to  which  she  could  lay  claim. 

274.  Reasons  for  the  failure  of  these  enterprises.  —  Most 
of  these  commercial   and   colonial   enterprises  were  failures. 
They  showed  the  characteristic  faults  of  the  time:  inefficiency 
of  organization,  a  failure  to  appreciate  the  difficulties  of  theit 
task,  and  impatience  in  their  attempts  to  solve  the  problems. 
They  had  special  elements  of  weakness,  moreover,   in  their 
rather  artificial  character,  and  in  the  fact  that  they  carried 
with  them  abroad  the  class  distinctions  and  prejudices  of  the 
home   country.     Still,   the   seventeenth   century   was   for  al't 
nations  a  time  of  experiment  in  distant  commerce  and  coloni- 
zation; a  large  proportion  of  failures  was  natural,  and  the 
French  had  attained  a  sufficient   measure  of  success  before 
1700  to  have  enabled  them  to  enter  the  international  compe- 
tition of  the  eighteenth  century  with  good  prospects.     Their 
prospects  were  blighted,  and  France  lost  its  opportunity  to 
become  a  "world-power"  by  the  fault  of  the  French  political 
constitution,   which   put  the  interests  of  the  people  at   the 
mercy  of  one  man,  the  king. 

275.  Mistaken  policy  of  Louis  XTV.  —  The  "  Great  Mon- 
arch," Louis  X  LV,  did  not  lack  good  advisers.     The  philosopher 
Leibnitz  proposed,  at  this  critical  period  in  French  history 
when  the  country  could  choose  to  be  either  a  land  or  a  sea 
power,  that  it  should  select  the  latter  alternative,  and  base  its 
greatness  on  control  of  the  sea  and  of  commerce.     He  said 
that  France  needed  peace  at  home  to  permit  an  expansion  of 
its  power  abroad,  where  the  richest  prizes  of  power  were  to  be 
had;  and  he  urged  the  occupation  of  Egypt,  to  give  France 
the  control  of  trade  to  the  Levant  and  the  far  East.     But 
Louis  thought  that  the  French  frontier  was  too  near  to  Paris 
and  saw  tempting  morsels  of  territory  on  the  other  side  of  it; 
he  found  the  arrogance  of  the  Dutch  galling  to  his  pride;  he 
wanted  to  raze  the  Pyrenees  by  putting  a  French  prince  on 
the  Spanish  throne.     He  engaged,  therefore,   in  a  series   of 
continental  wars  continuing  nearly  fifty  years,  which  returned 


236  A  HISTORY  OF  COMMERCE 

little  or  no  gain  in  Europe,  and  destroyed  the  power  of  France 
in  the  other  continents.  Louis'  policy  prompted  his  biographer 
to  a  comment  of  sad  significance,  "The  inhabitants  of  the 
several  nations  of  Europe  have  scarce  ever  any  interest  in  the 
wars  of  their  sovereigns." 

This  sovereign  found  France  vigorous  and  offering  brilliant 
promises  of  development;  he  left  her  weighted  with  taxes  and 
debt.  A  distinguished  Frenchman  said  toward  the  close  of 
this  reign  that  a  tenth  of  the  people  were  reduced  to  beggary, 
and  of  the  remainder  over  one  half  were  in  no  condition  to  give 
alms,  they  were  so  near  to  beggary  themselves. 

276.  Decline  of  the  French  colonial  empire  in  the  eighteenth 
century.  —  The  colonial  possessions  which  France  surrendered 
to  England  at  the  close  of  the  wars  (the  Hudson's  Bay  Terri- 
tory, Nova  Scotia,  and  Newfoundland)  seem  comparatively 
unimportant,  but  their  loss  was  significant.     The  two  countries 
had  chosen  different  paths.     England  continued  to  build  up 
a  colonial  empire;  France  continued  to  spend  her  resources  in 
continental  wars,  at  the  cost  of  her  commerce  and  her  colonies. 
The  Seven  Years'  War,  ending  in  1763,  marks  practically  the 
end  of  the  conflict.     France  surrendered  all  her  possessions  on 
the  North  American  continent,  and  some  of  those  in  the  West 
Indies  and  Africa;  and  abandoned  forever  the  hope,  at  one 
time  most  promising,  of  building  up  an  empire  in  India.     So 
little  were  the  colonies  appreciated  in  France  that  some  good 
Frenchmen  rejoiced  at  their  loss,  and  only  wished  that  more 
of  "those  wretched  possessions"  might  have  been  transferred, 
to  ruin  the  enemy! 

277.  Growth,  notwithstanding,  in  the  commerce  of  France. 
—  The  reader  must  not  infer  from  preceding  paragraphs  that 
French  commerce  was  stationary  or  declining  in  the  eighteenth 
century.     Colonial  expansion  was   often  a  long-time  invest- 
ment, from  which  a  country  could  hope  to  recover  the  full 
return  only  after  the  lapse  of  generations,  sometimes  after  the 
colony  had  established   its  freedom.     The  full  effect   of  the 
French  policy  is  apparent  only  in  the  nineteenth  century,  and 


FRANCE:  SURVEY  OF  COMMERCIAL  DEVELOPMENT       237 


238 


A   HISTORY   OF  COMMERCE 


elements  which  we  have  not  yet  considered  must  be  taken 
into  account  to  explain  why  France  has  been  passed  by  other 
countries  in  the  race  for  industrial  supremacy.  In  the  eigh- 
teenth century,  in  spite  of  a  misguided  foreign  policy,  in  spite 
of  burdensome  taxes,  and  in  spite  of  a  vicious  organization  of 
internal  trade  and  manufactures  which  will  be  described  later, 
France  profited  by  her  size  and  resources  to  build  up  a  great 
foreign  trade.  Some  features  of  this  trade  will  be  apparent 
from  the  following  table,  to  which  the  same  remarks  apply 
that  have  already  been  made  on  the  subject  of  statistics. 
The  figures  show  in  millions  of  livres  (and  a  rough  equivalent) 
the  trade  of  France  with  the  various  continents  in  1716,  when 
the  country  was  just  recovering  from  war  and  commerce  was 
unduly  depressed,  and  1787,  when  a  short  period  of  unusually 
active  trade  preceded  the  French  Revolution. 

COMMERCE  OF  FRANCE  BY  CONTINENTS 


1716 


1787 


Europe  

liv.      176.6 

$   35. 

liv.      804.3 

$   161 

America  

25.8 

5. 

269.9 

54 

Asia  

9.2 

2. 

52.1 

10 

Africa  

1.1 

0.2 

6.5 

1 

Total  

214.9 

43. 

1153.5 

230 

278.  Analysis  of  French  commerce  in  the  eighteenth  cen- 
tury. —  Without  attempting  to  draw  too  much  from  figures 
which  are  known  to  be  inaccurate,  we  can  base  on  this  table 
some  few  important  conclusions.  The  commerce  of  France 
grew  at  a  rate  not  far  from  that  of  England's  in  the  eighteenth 
century.  The  commerce  of  France,  however,  continued  in 
much  greater  degree  to  be  European;  the  chief  trade  of  the 
country  was  with  its  neighbors,  Italy  and  Germany,  and, 
after  them,  with  England  and  the  Baltic.  To  these  countries 
France  sent  manufactures  amounting  to  less  than  one  third 
of  the  total  exports  (122  million),  the  remainder  being  made 
up  of  articles  of  food  and  drink  and  various  other  raw  materials. 


FRANCE:  SURVEY  OF  COMMERCIAL  DEVELOPMENT      239 

The  failure  of  France  to  manufacture  goods  which  would  hold 
their  own  in  the  world  market  must  be  regarded  as  her  vital 
weakness.  We  see  it  especially  well  illustrated  in  the  trade 
with  the  United  States.  During  the  later  years  of  the  Revo- 
lution (1781-1783)  France  sent  to  the  United  States  exports 
amounting  to  over  eleven  million  livres  a  year.  A  few  years 
afterward  (1787-1789),  when  the  restoration  of  peace  should 
have  stimulated  the  trade,  it  had  dropped  to  less  than  two 
millions.  The  French  had  sent  poor  wares,  and  could  not 
hold  the  trade  when  the  English  were  free  to  compete  again. 

279.  Value  of  the  French  sugar  colonies.  —  It  was  the 
fortune  of  the  French  to  keep  of  their  colonies  in  America 
just  those  which  were  capable  of  the  most  rapid  economic 
development.  They  were  West  India  islands  in  which  sugar 
was  produced  by  slave  labor.  Comparatively  few  Frenchmen 
had  settled  in  the  islands,  and  in  the  long  run  they  were  to 
prove  of  little  advantage  to  the  home  country,  but  in  the 
eighteenth  century  they  were  veritable  gold  mines.  The  lead- 
ing position  in  sugar  production,  which  had  first  been  taken 
by  the  Portuguese  in  Brazil,  passed  early  from  them  to  the 
English,  and  was  taken  before  1750  by  the  French,  who  soon 
controlled  the  European  market.  A  part,  also,  of  the  imports 
from  Africa  comprised  sugar  from  islands  in  the  Indian  ocean, 
while  the  African  slave  trade  was  exploited  for  the  benefit  of 
American  planters. 

QUESTIONS  AND  TOPICS    • 

1.  Striking    characteristics    and    chief   weaknesses    of    the    political 
system   of    France.     [Seebohm,    Prot.    rev.,   40-46,    210-212;   Cheyney, 
Eur.  background,  115-121;  Taine,  Ancient  regime.] 

2.  Effect  of  the  Hundred  Years'  War  (a)  on  the  people,  (6)  on  the 
power  of  the  king.     [Adams,  Growth,  chap.  9.] 

3.  Effect  upon  France  of  the  religious  wars,  and  the  emigration  of 
the  Huguenots.     [Adams,  180  ff.,  227  ff.] 

4.  Write  a  report  on  the  career  of  Jacques  Coeur.     [Encyc.  Brit.] 

5.  Write  a  report  on  one  of  the  French  explorers.     [Manuals  of  U.  S. 
history  and  references;  Thwaites,  France  in  Amer.,  chap.  1:  Parkman, 
Pioneers  of  France.] 


240  A  HISTORY  OF  COMMERCE 

6.  Write  a  brief  report  on  the  history  of  the  commerce  of  Marseilles. 
[Encyc.] 

7.  Reforms  under  Henry  of  Navarre.     [Adams,  Growth,  p.  183  ff.; 
P.  F.  Willert,  Henry  of  Navarre,  N.  Y.,  Putnam,  1893,  $1.50,  chap.  8.] 

8.  Reforms    by  Richelieu,    1624-1642.    [J.   B.    Perkins,   Richelieu, 
N.  Y.,  Putnam,  1900,  $1.50,  chaps.  6,  9.] 

9.  Economic  organization  and  commerce  of  the  French  in  America. 
[Bateson  in  Camb.  mod.  hist.,  vol.  7,  chap.  3;  Thwaites,  France,  chap.  8; 
Parkman,  Old  regime,  part  2.] 

10.  Make  a  written  summary  of  the  wars  of  Louis  XIV,  showing 
gains  and  losses  of  territory,   in  Europe  and  in  the  rest  of  the  world. 
[Adam  Growth,  p.  216  ff .] 

%1.  Opportunity  lost  by  Louis  XIV  to  build  up  an  empire  by  sea 
power.  [Mahan,  Sea  power,  chap.  2,  and  pp.  141  ff.,  198  ff .,  219  ff.] 

12.  Prepare  a  written  summary  of  the  results  of  the  French  wars  of 
the  eighteenth  century.     [Adams,  Growth,  chap.  14.] 

13.  Prepare  a  graphic  chart  from  the  table  of  figures,  sect.  277,  as 
suggested  above  in  the  case  of  England,  and  study  the  conclusions  to  be 
drawn  from  figures  and  chart. 

14.  Combine  the  charts  for  England  and  for  France,  and  draw  con- 
clusions from  the  comparison.     Endeavor,  if  possible,  by  extending  your 
reading,  to  settle  the  questions  which  this  comparison  will  suggest.     Note, 
however,  that  the  figures  refer  to  different  dates,  that  they  are  a  far  less 
accurate  index  of  the  facts  than  you  would  suppose,  and,  finally,  that  the 
reduction  to  modern  currency  is  very  rough. 

15.  Write  a  report  on  the  history  and  commerce  of  one  of  the  follow- 
ing West  India  islands  under  French  rule:  (a)  San  Domingo,  (6)   Guade- 
loupe,    (c)    Martinique.     [Encyclopedia;    Homans'   Cyc.    of    commerce; 
C.   B.  Norman,  Colonial  France,  or  Bryan  Edwards'  History,  if  that  book 
is  available.] 

BIBLIOGRAPHY 

Of  the  general  works  on  French  history,  Adams,  **  Growth  of  the 
French  nation,  is  excellent. 

Of  the  works  on  particular  periods  all  the  books  of  James  Breck  Per- 
kins can  be  highly  recommended  for  the  attention  paid  to  economic  con- 
ditions; I  refer  above  only  to  the  small  book  on  Richelieu.  See  the  A.  L.  A. 
Catalogue  for  titles  of  others.  Paul  Lacroix,  The  XVIIIth  century,  Lon- 
don, no  date,  is  a  popular  illustrated  work,  with  a  chapter  on  commerce, 
of  no  great  importance.  Books  discussing  the  conditions  leading  to  the 
French  Revolution  are  valuable  for  the  light  they  throw  on  the  organiza- 
tion of  France  in  the  period  of  modem  history.  Books  by  Taine,  E.  J. 
Lowell,  and  R.  H.  Dabney  will  be  useful  in  this  connection;  and  vol.  4, 


FRANCE:  SURVEY  OF  COMMERCIAL  DEVELOPMENT    241 

no.  5,  of  the  Univ.  of  Penn.  Translations  (Typical  Cahiers  of  1789)  is  a 
convenient  selection  from  sources. 

A  bibliography  of  French  colonial  history  in  America  will  be  found  in 
the  Guide  of  Channing  and  Hart,  in  the  Cambridge  mod.  hist.,  vol.  7,  pp. 
766-771,  or  in  R.  G.  Thwaites,  France  in  America,  N.  Y.  Harper,  1905. 
The  last  named  book  is  not  so  serviceable  for  purposes  in  view  here  as 
others  in  the  same  series;  and  the  student  will  turn  by  preference  to  Cam- 
bridge mod.  hist.,  vol.  7,  chap.  3,  where  the  subject  of  the  French  in 
America  (1608-1744)  is  treated  by  Miss  Mary  Bateson,  with  due  regard 
to  economic  interests.  Of  Parkman's  works  see  especially  The  old  regime, 
Boston,  Little,  1902,  $2.  Norman,  Colonial  France,  London,  1886,  covers 
briefly  the  history  of  all  the  French  colonies;  the  French  West  Indies  are 
included  in  A.  K.  Fiske.  S.  L.  Mims,  Colbert's  West  India  policy,  New 
Haven,  1912,  is  a  scholarly  study  of  a  particular  topic. 


CHAPTER  XXV 
FRANCE: POLICY 

280.  History  of  the   French   customs  tariff.  —  After  this 
survey  of  the  development  of  French  commerce  we  can  gain 
an  appreciation  of  the  opportunities  for  still  greater  growth 
that  were  lost,  by  considering  the  obstacles  with  which  the 
merchant  had  to  contend. 

First  of  all,  as  a  matter  of  course,  there  was  the  customs 
tariff  on  the  frontier.  This  went  through  the  normal  course 
of  development  in  the  period  under  consideration.  The  gov- 
ernment attempted  to  reduce  to  some  sort  of  system  the 
scattered  duties  of  the  earlier  period;  and  under  the  influence 
of  mercantilist  doctrines  it  ceased  to  use  the  duties  chiefly  for 
raising  revenue.  The  idea  of  using  the  tariff  to  protect  home 
industries,  which  was  at  first  held  vaguely  and  applied  only 
occasionally,  gained  strength  with  time  and  was  made  by 
'Colbert,  a  minister  of  Louis  XIV,  the  chief  point  in  the  tariff 
system.  In  1664,  and  again  three  years  later,  the  duties  were 
raised  to  protect  home  manufactures;  duties  were  raised  two- 
fold and  more,  and  when  wares  were  found  still  entering  the 
kingdom  they  were  in  some  cases  absolutely  prohibited.  The 
high  tariff  led  to  reprisals  on  the  part  of  other  countries,  and 
strained  political  relations  with  them;  it  was  one  of  the  causes^ 
of  open  war  with  the  Dutch.  It  remained  throughout  the 
period  a  serious  obstacle  to  commerce  with  advanced  industrial 
countries  like  England  and  Netherland;  the  breaches  made  in 
it  by  commercial  treaties  were  comparatively  unimportant; 
and  smuggling  formed  in  France  as  in  England  the  real  safety- 
valve  of  the  commercial  system. 

281.  Persistence  of  customs  frontiers  inside  France.  —  Far 

242 


FRANCE:  POLICY  243 

more  serious  than  the  frontier  tariff  were  the  customs  duties 
inside  of  France.  The  Trench  kings  had  made  their  country 
by  the  political  union  of  feudal  fragments,  and  had  never 
used  their  great  power  to  abolish  the  evidences  of  former 
separation  and  to  unify  their  territory  for  the  purposes  of 
commerce.  We  must  distinguish  three  different  sections  of 
the  country.  The  North,  roughly  speaking,  was  an  area  in 
which  internal  trade  was  free,  i.e.,  in  which  the  provinces  were 
not  separated  by  customs  barriers.  The  South,  on  the  other 
hand,  was  composed  of  provinces  "reputed  foreign"  which 
had  kept  their  tariffs,  so  that  trade  here  was  not  free,  and 
wares  passing  between  this  and  other  parts  of  France  had  to 
pay  duty.  Still  a  third  section  was  the  East,  "provinces 
foreign  in  fact";  these  provinces  did  not  form  part  of  France 
at  all,  commercially  speaking,  for  they  were  outside  the  national 
customs  frontier,  enjoying  free  trade  with  other  countries  and 
paying  duties  when  they  sent  wares  to  other  parts  of  France. 
If  the  reader  will  recall  the  economic  evils  that  resulted  in  the 
Middle  Ages  from  the  separation  of  districts  he  will  readily 
appreciate  how  much  France  lost  by  carrying  over  a  medieval 
system  to  modern  times.  It  was  impossible  for  a  district  to 
make  the  most  of  its  resources  by  specializing  in  production. 
A  producer  did  not  have  France  for  a  market;  a  consumer  did 
not  have  France  for  his  source  of  supply;  each  was  bound  by 
provincial  restrictions. 

282.  Persistence  of  local  toll  barriers.  —  Still  the  picture 
is  not  complete.  There  were  not  only  provincial  tariffs  inside 
of  France  but  also  local  customs  inside  the  provinces.  Let  us 
consider  the  case  of  a  merchant  of  Paris  who  desired  to  export 
a  package  of  cloth  to  England  in  the  sixteenth  century.  He 
had  to  pay  not  only  the  national  export  duty,  but  also  at 
fifteen  places  on  the  way  down  the  Seine  he  had  to  pay  local 
customs;  at  Rouen  he  must  pay  provincial  customs;  and  we 
must  add  to  his  list  of  expenses  freight,  pilotage,  etc.  Wine 
carried  from  Bercy  (near  the  Swiss  frontier)  to  Paris,  in  the 
next  century,  had  to  pay  sixteen  different  dues  on  the  way  to 


244  A  HISTORY  OF  COMMERCE 

market.  In  the  sixteenth  century  there  were  over  a  hundred 
tolls  or  customs  on  the  Loire;  in  the  next  century  there  were 
still  twenty-eight  on  the  stretch  from  Orleans  to  Nantes;  and 
some  persisted  till  the  French  Revolution.  Conditions  im- 
proved in  the  course  of  time,  as  the  above  figures  suggest, 
but  improvement  was  obstructed  by  the  opposition  of  local 
interests  and  retarded  by  the  delay  of  the  law;  and  the  Revo- 
lution was  needed  to  wipe  away  these  remnants  of  the  Middle 
Ages  with  many  others. 

283.  Manufactures;  the  gild  system  maintained  in  spite  of 
its  bad  effects.  —  Before  we  leave  the  commercial  history  of 
France  in  this  period  we  must  consider  still  another  subject, 
the  organization  of  manufacturing,  to  understand  why  the 
country  did  not  make  better  use  of  its  resources,  and  why  it 
entered  the  nineteenth  century  handicapped  in  competition 
with  a  country  like  England.     Three  general  topics  will  be 
considered:  (1)  the  gild  system;  (2)  the  national  regulation  of 
manufactures;  (3)  the  royal  or  privileged  manufactures. 

(1)  The  gilds  which  in  England  during  this  period  gave 
place  to  a  more  modern  and  more  efficient  system  persisted 
in  France  and  even  extended  their  influence.  When  the 
government  was  in  want  of  money  it  found  the  gilds  more 
convenient  subjects  of  taxation  than  scattered  artisans;  for 
fiscal  reasons,  therefore,  and  not  for  any  economic  advantages, 
it  encouraged  and  even  compelled  artisans  to  unite  in  gilds 
on  the  old  model.  The  result  was  a  rigid  separation  of  allied 
trades  and  a  complication  of  processes  which  would  seem 
incredibly  stupid  to  a  modern  merchant  or  to  the  head  of  a 
modern  factory. 

284.  Separation  of  trades.  —  At  Amiens  there  were  nine 
distinct  corporations,  each  with  its  specific  regulations,  engaged 
in  the  manufacture  of  woolens  alone.     Every  gild  watched 
jealously  to  see  that  another  gild  did  not  infringe  on  its  petty 
field,  and  there  was  an  interminable  bickering  among  them 
over  the  question  of  monopoly.     The  quarrel  of  the  goose- 
roasters  and  the  poulterers  lasted  half  a  century,  and  went 


FRANCE:  POLICY  245 

against  the  poulterers,  who  were  restricted  to  the  sale  of 
uncooked  game;  but  the  roasters  emerged  from  the  conflict 
only  to  meet  another  foe,  the  cooks,  who  were  flushed  with  a 
recent  triumph  over  the  gild  of  "  vinegarers-mustarders  "  (who 
made  sauces);  and  after  another  half-century  the  cooks  suc- 
ceeded in  limiting  the  right  of  the  roasters  to  sell  cooked  meat. 
This  is  an  example  of  the  conflicts  which  all  the  time  absorbed 
the  energy  and  the  resources  of  people  who  were  engaged  in 
kindred  lines  of  retail  trade  and  manufactures;  cobblers  and 
shoemakers;  old-clothes  men  and  tailors;  watchmakers  and 
clock-makers;  bakers  and  restaurant-keepers;  and  so  on  through 
a  list  that  seems  interminable.  Some  tradesmen  had  a  specially 
long  list  of  enemies.  The  mercers,  for  instance,  who  dealt  in 
certain  lines  of  dry-goods,  in  the  course  of  a  century  had 
sixteen  decisions  of  the  supreme  court  (Parlement)  in  their 
conflict  with  the  glovers;  and  fought  also  the  "bonneters- 
cappers,"  and  nearly  all  the  other  tradesmen  whose  wares  they 
sold.  The  question,  who  had  the  right  to  make  and  sell  buttons, 
rose  nearly  to  the  dignity  of  a  question  of  state;  search  was 
made  in  private  houses  for  illegal  buttons,  and  private  individ- 
uals were  arrested  in  the  street  for  wearing  them. 

285.  Influence  of  the  gilds  in  preventing  technical  progress. 
—  Space  is  lacking  for  a  description  of  all  the  evils  that  the 
gild  system  entailed  on  French  industry  in  this  period,  and 
the  reader  is  referred  to  the  general  discussion  of  the  gilds  in 
a  previous  chapter,  with  the  assurance  that  all  the  evils  there 
•enumerated  were  well  represented  in  France.  We  cannot  leave 
the  topic,  however,  without  notice  of  the  obstacles  which  the 
gilds  put  in  the  way  of  inventions  and  technical  improvements. 
A  coppersmith  who  devised  a  new  helmet  was  set  upon  by 
the  armorers;  a  hatter,  who  improved  his  wares  by  mixing 
silk  with  the  wool,  was  attacked  by  all  the  other  hatters;  the 
inventor  of  sheet  lead  was  opposed  by  the  plumbers;  a  man 
who  had  made  a  success  in  print-cloths  was  forced  to  return 
to  antiquated  methods  by  the  dyers.  The  gildsmen  opposed 
not  only  new  wares  and  methods,  but  also  the  use  of  machinery 


246  A  HISTORY  OF  COMMERCE 

and  production  on  a  large  scale.  A  Lyons  silk-weaver  could 
keep  only  four  looms;  a  Lille  serge-maker  secured  the  right  to 
have  twenty  looms,  that  he  might  carry  on  experiments  looking 
to  improvement  of  the  manufacture,  only  by  special  privilege 
and  against  the  vigorous  protest  of  the  city  government.  In 
spite  of  all  opposition  there  was  improvement,  but  the  diffi- 
culties were  so  great  that  nine  reformers  must  have  failed 
where  one  succeeded.  The  history  of  the  French  gilds  of  this 
period  is  a  history  of  wasted  opportunities. 

286.  Narrow  restrictions  imposed  on  manufactures  by  the 
government.  —  (2)  Industries  were  tied  down-  not  only  by  the 
narrow  regulations  of  the  gilds  but  also  by  laws  of  the  central 
government.  Every  government  believed  in  this  period  that 
it  was  unwise  to  let  manufacturers  follow  their  own  ideas  in 
all  respects,  to  stand  or  fall  according  to  their  success  in  pleasing 
the  public.  Even  England  had  an  extensive  system,  prescrib- 
ing the  standards  for  the  products  of  certain  manufactures. 
The  English  system,  however,  did  comparatively  little  harm, 
if  it  accomplished  little  good,  while  there  can  be  no  question 
that  a  similar  system  in  France  was  carried  so  far  that  it  was 
a  serious  check  to  industrial  development.  This  excessive 
growth  of  government  regulation  was  most  marked  under 
Colbert,  the  minister  of  Louis  XIV,  to  whom  reference  has 
already  been  made  as  a  leader  in  the  extension  of  the  protec- 
tive tariffs;  and  the  system  continued  throughout  the  period. 
Taking  the  cloth  manufacture  for  an  illustration,  Colbert  fixed 
by  law,  for  each  kind  of  cloth,  the  length  and  breadth,  the 
dimensions  of  the  selvage,  the  number  of  threads  in  the  warp, 
the  quality  of  the  raw  materials,  and  the  method  of  manufac- 
ture. His  instructions  for  dyeing  contained  317  articles,  to 
which  dyers  must  conform.  To  fix  responsibility  and  force 
compliance  all  cloth  had  to  bear  the  special  marks  of  the 
weaver,  dyer,  and  finisher,  the  seal  of  the  gild,  and  sometimes 
another  mark.  These  regulations  grew  constantly  more  com- 
plicated; an  official  said  in  1787  that  the  regulations  on  manu- 
factures filled  eight  volumes  in  quarto. 


FRANCE:  POLICY  247 

287.  Burden  of  these  restrictions  on  manufactures.  —  There 
can  be  no  question,  either  of  the  honesty  of  Colbert's  intentions 
or  of  the  energy  he  showed  in  carrying  them  out.     He  sent  out 
agents  everywhere  to  study  industries  and  to  talk  with  the 
manufacturers,  that  he  might  legislate  to  the  best  advantage. 
One  man,  however,  cannot  know  a  hundred  businesses  better 
than  the  men  who  are  carrying  them  on.     Colbert  and  his 
successors  were  ignorant  of  many  points,  were  deceived  in 
many  others.     The  result  was  a  mass  of  regulations  of  which 
many  were  utterly  bad,  injuring  both  producer  and  consumer. 
The  regulation  prescribing  a  minimum  breadth  for  cloth  would 
have  killed  an  industry  in  one  part  of  France  that  wove  strips 
for  flags,  an  industry  in  another  part  that  could  sell  cloth 
cheaper  by  weaving  so  narrow  a  breadth  that  one  man  could 
tend  the  loom.     These  industries,  after  a  tedious  and  expensive 
delay,  secured  exemption  from  the  law;  others,  less  fortunate, 
were  destroyed.     A  manufacturer  ran  always  the  risk  of  having 
his  wares  confiscated,  not  because  they  were  bad  and  people 
did  not  want  them,  but  because  they  failed  to  conform  in  some 
point  to  hide-bound  regulations.     An  official  inspector,  shortly 
before  the  French  Revolution,  said  that  in  every  week  of  years 
past  he  had  seen  80  or  100  pieces  of  cloth,  good  except  from 
the  government  standpoint,  cut  in  pieces  or  burned  because 
they  were  irregular.     Even  the  French  revolted  at  some  of  the 
regulations,  and  half  of  the  laws  were  evaded  with  the  con- 
nivance of  officials. 

288.  Special   privileges   granted   to   certain  manufactures; 
resulting   abuses.  —  (3)  While   the   government    restricted  in 
this   fashion  the   natural    development    of    manufactures,   it 
granted  not  only  exemption  from  its  own  rules  but  liberal 
grants  of  money  taken  from  taxpayers  to  stimulate  favored 
industries.     This   practice,    begun   in   the   sixteenth   century, 
grew  under  and  after  Colbert.     It  enabled  certain  industries 
to  expand  as  they  would  otherwise  have  been  unable  to  do, 
and  to   reach  the  higher  grade   of  organization   which  was 
coming  as  a  natural  growth  in  England.     Unfortunately,  how- 


248  A  HISTORY  OF  COMMERCE 

ever,  the  privileges  went  not  to  the  most  deserving  but  to  the 
loudest  and  most  adroit  claimants.  To  gain  the  privileges, 
which  included  everything  from  exemption  from  taxes  and 
handsome  subsidies  down  to  titles  of  nobility,  the  manufac- 
turer did  not  need  to  show  that  he  had  some  technical  improve- 
ment to  introduce;  it  was  sufficient  if  he  promised  to  bring  in 
a  foreign  industry  or  even  to  extend  one  already  in  existence 
at  home.  The  royal  factories  abused  their  power  to  raise 
prices  to  the  consumers  and  to  lower  the  wages  of  the  laborer. 
Some  of  them  came  to  be  regarded  as  public  calamities.  They 
showed  in  general  the  characteristics  of  the  hothouse  plant, 
which  cannot  thrive  unaided,  and  most  of  them  failed  after  a 
longer  or  shorter  career.  We  can  say  of  them  as  of  many  other 
manifestations  of  the  French  policy  of  the  period;  some  good 
may  have  resulted  in  ways  unknown  to  us,  but  the  evils  are 
apparent,  and  justify  us  in  calling  the  policy  bad. 

QUESTIONS  AND  TOPICS 

1.  The  protective  policy,  as  applied  by  Colbert.     [Palgrave's  Diet.; 
A.  J.  Sargent,  Economic  policy  of  Colbert,  N.  Y.,  1899,  chap.  4.] 

2.  Measure  on  a  map  the  length  of  one  or  more  of  the  stretches  on 
which  tolls  were  levied,  sect.  282;  estimate  the  average  distance  separating 
toll  barriers;  apply  to  a  map  of  your  own  vicinity. 

3.  If  you  are  familiar  with  the  organization  of  some  modern  manu- 
facture write  an  essay  showing  how  efficiency  would  be  impaired  by 
insisting  on  the  separation  of  allied  trades.     [The  advanced  student  will 
find  helpful  and  suggestive  on  this  and  similar  topics,  Biicher.  Indust.  ev., 
chaps.  6,  7,  8.] 

4.  Write  a  report  on  any  instances  known  to  you  of  bad  results  fol- 
iowing  the  strict  division  of  occupations  among  trade  unions. 

5.  Write  a  report  on  any  instances  known  to  you  of  opposition  to 
technical  improvements,  the  introduction  of  machinery,  etc.,  by  modern 
trade  unions. 

6.  Attempt  of  Colbert  to  establish  regulations  for  manufacturers: 
object,    methods,    variety  of    regulations,    results.      [Sargent,  Colbert, 
chap.  3.] 

7.  With  what  object  and  to  what  extent  do  governments  now  seek 
to  regulate  manufactures?    [Fairer,  State  in  relation  to  trade,  London 
&  N.  Y.,  Macmillan,  $1.] 


FRANCE:  POLICY  249 

8.  Compare  with  the  French  the  English  experience  with  privileged 
manufactures.     [Hewins,  Eng.  trade,  chap.  1;  Encyc.  Brit.,  article  Mo- 
nopoly.] 

9.  Origin  and  early  history  of  the  modern  system  of  patents  for  in- 
ventions.    [Same  references;  Encyc.,  article  Patents.] 

BIBLIOGRAPHY 

See  preceding  chapter. 


CHAPTER  XXVI 
THE  GERMAN  STATES 

289.  -Political  survey  of  Germany  about  1500.  —  After  con- 
sidering a  country  in  which  the  central  government  was,.,  so 
to  speak,  too  strong  for  the  interests  of  commercial  develop- 
ment, it  will  be  instructive  to  take  up  countries  in  which  it 
was  certainly  too  weak,  Germany  and  Italy. 

Germany  presented  a  striking  contrast  in  its  political  and 
in  its  economic  development  at  the  beginning  of  the  period, 
about  1500.  In  political  organization,  the  central  government 
had  almost  no  power;  it  was  the  mere  shadow  of  a  reality. 
The  real  power  rested  in  hundreds  of  petty  states,  of  which 
some  were  but  a  few  square  miles  in  extent.  There  was  no 
authority  which  could  keep  in  order  these  little  states  and  the 
different  classes  of  people  which  composed  them.  The  history 
of  Germany  in  this  period  is  a  sad  story  of  conflicts  between 
classes,  —  peasants,  burghers,  knights,  and  princes;  conflicts 
between  Catholics  and  Protestants;  conflicts  between  the  states 
themselves.  In  these  struggles  the  best  energies  of  the  Ger- 
mans were  absorbed;  they  were  marking  time  or  even  going 
backward  while  the  more  fortunate  peoples  of  Europe  were 
advancing.  The  Germans  learned  at  last  to  despair  of  realizing 
their  dream  of  a  national  government.  Not  all  parts  of  the 
country,  however,  were  equally  unfortunate;  some  came  under 
the  rule  of  princes  who  managed  to  build  up  a  strong  power  at 
home  arid  abroad.  Two  of  these  local  states  are  of  especial 
importance,  for  between  them  they  have  divided  the  fragments 
of  the  old  Germany,  and  made  great  states  in  modern  Europe. 
One  of  them,  Prussia,  is  the  nucleus  of  what  we  now  call 
Germany.  The  other,  Austria,  which  included  the  Germans 

250 


THE  GERMAN  STATES 


251 


of  the  South,  added  to  them  fragments  of  territory  peopled 
by  other  races,  and  made  the  state  of  Austria-Hungary. 

290.  Development  of  the  economic  organization.  —  There 
was  a  contrast,  it  was  said,  between  the  political  and  the  eco- 
nomic development.  ,The  very  lack  of  a  central  power  had 


GERMANY 

IN  THE 

18th  CENTURY 

i    Boundary  of  t/te  Empire 


The  objects  of  the  map  are:  (1)  to  show  the  possessions  of  the  Hohenzollerns  (Prussian) 
and  Hapsburgs  (Austrian);  (2)  to  show  the  small  fragments  of  which  remaining  Ger- 
many was  composed.  To  preserve  clearness,  many  of  the  smaller  fragments  are  not 
indicated.  Note  that  the  Empire  included  some  states  not  German  (Flanders),  and 
did  not  include  all  German  states  (East  Prussia,  Silesia). 

enabled  some  of  the  sections  and  classes  to  advance  rapidly 
by  freeing  them  from  control.  In  the  fifteenth  century  the 
agricultural  classes,  who  had  been  serfs  in  the  Middle  Ages  and 
who  were  to  be  reduced  again  to  serfdom  later  by  the  political 
oppression  to  which  constant  wars  gave  rise,  were  free  and 


252  A   HISTORY  OF  COMMERCE 

prosperous.  The  cities  were  more  rich  and  populous  than 
those  of  any  other  country  north  of  Italy.  Not  only  had 
manufacturing  and  mining  made  rapid  progress,  but  banking 
and  commerce  too.  The  Fuggers  and  the  Welsers  of  southern 
Germany  were  great"  promoters  and  financiers,  with  interests 
extending  over  all  Europe,  from  which  they  drew  enormous 
wealth.  German  merchants  showed  the  most  enterprise  and 
energy  of  any  north  of  the  Alps;  they  distributed  among  other 
countries  of  the  Continent  the  Levant  wares  which  they  secured 
from  Venice,  and  they  controlled  the  commerce  of  the  West  of 
Europe  with  the  North  and  East.  We  shall  begin  our  sketch 
•of  the  decline  of  German  commerce  by  returning  now  to  the 
history  of  the  Hanseatic  League,  which  we  left  in  full  control 
of  this  last  branch  of  trade. 

291.  Condition   of   the   Baltic   trade.  —  The    Baltic   trade 
suffered  in  the  period  about  1500  from  influences  over  which 
merchants    had    no    control.     The    Protestant    Reformation 
caused  a  decline  in  the  demand  for  some  of  its  staple  wares: 
wax,  which  had  been  largely  used  for  candles  in  church  ser- 
vices, and  fish,  of  which  the  consumption  had  been  greatly 
furthered  by  the  Catholic  periods  of  fasting.     The  most  valuable 
fish,  moreover,  the  herring,  ceased  to  enter  the  Baltic  Sea,  and 
by  limiting  f heir  feeding  ground  to  the  North  Sea  enabled  the 
Dutch  to  become  leaders  in  the  fishing  industry.     Imitation 
of  Italian  fashions  in  dress,  with  which  the  French  became 
acquainted  about  1500,  caused  less  demand  for  furs.     All  these 
changes  hurt  the  Baltic  trade,  but  they  were  far  from  destroying 
it.     This  trade  grew,  in  fact,  throughout  the  period;  it  could 
afford  to  dispense  with  the  luxuries  of  commerce  for  it  con- 
trolled the  necessaries,   grain  and   meat,   lumber  and   naval 
stores.     The  reasons  for  the  decline  of  the  Hanseatic  League 
are  to  be  sought  not  in  the  character  of  the  trade  but  in  the 
character  of  the  League  itself. 

292.  Decline  of  the  Hanseatic  League.  —  The  League  lacked 
organization.     The   many  towns   of  which  it   was   composed 
were  so  separated  by  physical  distance  and  by  divergence  of 


THE  GERMAN  STATES  253 

interests  that  they  could  not  cooperate  efficiently.  They  were 
strong  enough  to  crush  other  towns  which  sought  to  enter 
their  field,  but  they  were  unequal  to  the  contest  with  national 
states;  and  the  political  consolidation  of  the  countries  of 
northern  and  western  Europe  raised  up  enemies  with  whom 
they  could  not  compete.  In  nearly  twenty  years  (1476-1494) 
only  one  common  meeting  of  delegates  was  held.  Dissensions 
broke  out  inside  the  towns,  and  they  began  to  quarrel  among 
themselves.  Liibeck,  in  the  center,  put  forth  claims  opposed 
to  the  interests  of  towns  on  the  edge  of  the  League,  on  the 
lower  Rhine  and  in  Prussia.  Rising  commercial  towns  in  the 
western  part  of  the  Netherlands,  like  Rotterdam  and  Amster- 
dam, grew  up  outside  the  League  and  in  opposition  to  it. 
The  turning-point  in  the  decline  may  be  put  at  1535,  when 
Denmark  and  Sweden  were  strong  enough  to  break  the  Hansa 's- 
monopoly  by  opening  the  passage  into  the  Baltic  to  the  ships 
of  all  peoples.  Soon  other  states  were  carrying  the  war  into 
the  enemy's  country.  Sweden  threw  the  larger  part  of  the 
Russian  trade  to  the  Dutch.  The  English  built  up  a  prosperous 
trade  in  the  Baltic  Sea  and  on  the  Arctic  Ocean  at  Archangel. 
They  flooded  the  German  market  with  English  cloths,  and 
when  the  Hansa  resisted,  Elizabeth  expelled  the  members  of 
the  League  from  England.  In  1601  an  Englishman  could  say 
of  the  Hansa  towns:  "Most  of  their  teeth  have  fallen  out,  the 
rest  sit  but  loosely  in  their  head."  Of  the  great  League  soon 
only  three  towns  remained  as  Hanseatic  members,  Liibeck, 
Bremen,  and  Hamburg. 

293.  Decline  of  the  commerce  of  south  Germany.  —  While 
the  cities  of  north  Germany  were  losing  their  hold  on  a  growing 
commerce,  the  cities  of  the  South  found  a  large  share  of  their 
trade  taken  from  them  by  the  discovery  of  the  ocean  route  to 
India.  The  German  cities  (Nuremberg,  Augsburg,  Ulm,  etc.) 
fought  with  desperation  to  maintain  their  commerce,  and 
proof  exists  that  they  carried  on  an  active  commerce  with 
Italy  after  they  ceased  to  obtain  there  the  Oriental  wares,  and 
had  to  content  themselves  with  Italian  products.  Even  this 


254  A  HISTORY  OF  COMMERCE 

trade,  however,  fell  to  a  large  extent  into  the  hands  of  the 
Italians,  who  flooded  southern  Germany  and  drove  native 
Germans  out  of  business. 

The  Germans  were  not  entirely  unprepared  for  the  changes 
following  the  discoveries,  for  they  had  long  gone  in  considerable 
numbers  to  the  Spanish  peninsula,  by  land  through  southern 
France  or  from  a  French  or  Italian  harbor  to  Barcelona. 
Many  Germans  had  settled  in  Portugal,  and  for  a  time  the 
great  merchants  of  south  Germany  shared  in  the  Indian  trade 
at  its  source,  in  Lisbon.  The  great  German  financiers  shared 
also  for  a  brief  period  in  the  commerce  of  the  New  World. 
The  Ellingers  and  Welsers  leased  the  copper  mines  of  San  Do- 
mingo; the  Crombergers  had  silver  mines  at  Sultepeque;  the 
Tetzels  exploited  the  copper  mines  of  Cuba.  The  Welsers 
founded  Venezuela  by  a  military  expedition  which  they  financed, 
and  held  the  country  for  a  few  years. 

294.  The  chief  cause  of  decline  of  German  commerce  in 
this  period  was  political.  —  The  most  obvious  explanation  of 
the  failure  of  Germany  to  take  a  place  with  the  other  states  in 
the  commercial  expansion  following  the  discoveries  is  the 
disadvantage  of  her  position.  It  has  been  said  that  the  diver- 
sion of  commerce  to  the  oceanic  routes  exposed  the  countries 
of  central  Europe  (Italy,  Germany,  etc.)  to  a  condition  of 
commercial  glaciation,  such  as  Norway  would  experience 
physically  if  it  lost  the  warm  current  of  the  Gulf  Stream.  The 
difference  in  distance  of  a  few  hundred  miles  in  voyages  of 
thousands  does  not  explain  the  matter.  No  physical  differ- 
ences suffice  to  explain  why  Amsterdam  rose  and  why  Hamburg 
fell  so  rapidly.  The  weakness  of  Germany  was  not  physical. 
Nor  was  it  economic;  German  merchants  of  this  period  had 
more  free  capital,  more  business  ability  and  greater  energy 
than  the  merchants  of  any  other  country.  Germany's  weak- 
ness was  political.  The  payments  which  merchants  and  other 
Germans  made  in  the  form  of  taxes  and  loans  to  political 
authority  did  not  form  a  single  fund  which  could  be  used  for 
furthering  German  interests  at  home  and  abroad.  The  money 


THE  GERMAN  STATES  255 

went  to  a  great  number  of  rival  governments,  and  was  con- 
sumed in  their  particular  quarrels,  not  helping  but  actually 
hurting  German  business  interests. 

295.  The  natural  outlets  of  commerce  stopped  by  hostile 
states.  —  The   political   weakness   of  Germany  enabled   other 
states,  now  rising  to  power,  to  crumble  off  fragments  of  the 
country,  in  which  they  established  a  commercial  policy  hostile 
to  German  interests.     Before  long  the  mouth  of  every  one  of 
the  large  rivers  which  were  the  natural  commercial  outlets  of 
the  country  had  passed  under  foreign  control.     The  Rhine  was 
Dutch;  the  Weser  Swedish;  the  Elbe  Danish;  the  Oder  Swedish; 
the  Vistula  Polish.     Tolls  hampered  the  passage  of  wares  as 
effectually  as  though  Germany  were  surrounded  by  a  physical 
barrier  on  the  sea  side;  and  German  ships  almost  disappeared 
from  the  ocean. 

German  commerce  suffered  especially  by  the  rise  of  the 
Dutch  to  an  independent  position.  So  long  as  Antwerp  was 
the  great  market  of  the  Continent  Germans  traded  freely  with 
it,  and  through  it  to  Lisbon.  The  substitution  of  Amsterdam 
for  Antwerp  was  a  most  serious  blow  to  German  interests. 
The  Dutch  had  very  different  ideas  from  those  of  the  Flemish; 
they  wanted  to  do  all  the  trade  themselves  and  to  force  other 
people  to  a  position  of  commercial  dependence  on  them.  They 
made  the  lower  Rhine  practically  useless  for  their  rivals, 
raising  the  tolls  sixfold  and  more,  and  thereby  coming  into  a 
control  of  the  trade  as  far  as  Frankfort  on  the  Main. 

296.  The  damage  done  by  internal  dissensions  and  by  the 
Thirty  Years'  War. . —  Germany  was  not  only  cut  off  from  the 
outside  world  by  tariff  barriers,  but  cut  up  inside  by  the  tolls 
of  cities  and  territories.     Every  city  on  a  trade  route  wanted 
to  make  itself  a   "stapl£,"   i.e.,   have  all  goods  passing  the 
vicinity  brought  there  for  taxation  and  for  sale.     Frankfort 
on  the  Oder,  for  instance,  demanded  that  all  boats  passing 
down  the  river  Warthe  should  come  up  to  Frankfort  before 
they  could  continue  their  journey  down  the  Oder  to  Stettin. 
The  cities  of  Stettin,  Frankfort,  and  Breslau,  all  situated  on 


256  A   HISTORY  OF  COMMERCE 

the  Oder,  instead  of  using  that  river  for  peaceable  exchange, 
made  bitter  commercial  war  on  each  other  with  tolls  and 
prohibitions.  Conditions  grew  still  worse  after  the  Thirty 
Years'  War  (1618-1648),  a  terrible  conflict  which,  without 
exaggeration,  cost  Germany  one  hundred,  perhaps  two  hundred, 
years  of  development.  The  physical  means  of  transportation 
declined.  On  the  Elbe,  for  instance,  the  dikes  ceased  to  be 
repaired,  the  tow-path  disappeared,  the  banks  crumbled;  and 
sand  bars  and  snags  became  so  common  that  navigation  was 
difficult  and  costly.  Tolls  not  merely  doubled;  they  increased 
fivefold  and  more.  Space  is  lacking  for  a  description  of  all 
the  evils;  they  were  practically  a  reproduction  of  the  conditions 
which  happier  states  had  left  behind  them  five  hundred  years 
before. 

297.  Restriction  of  manufactures  by  the  gilds.  —  German 
manufactures  followed  about  the  same  course  as  that  of  the 
French  which  we  have  traced  above.  The  gilds  merited  the 
term  given  them  by  an  economist  of  the  seventeenth  century 
who  said  they  were  the  "curse  of  Germany";  they  seem  to 
have  been  in  some  respects  even  more  narrow  than  the  French 
gilds.  The  same  old  evils  reappear,  but  the  reader  must  be 
asked  to  take  these  for  granted  and  to  direct  his  attention  to 
some  new  aspects,  of  the  gild  organization.  Specially  note- 
worthy are  the  obstacles  put  in  the  way  of  any  man  who 
desired  to  become  a  full  member  of  a  gild.  Many  gilds  suc- 
ceeded in  making  the  exercise  of  the  trade  a  family  monopoly 
by  the  regulation  that  no  man  could  become  a  master  who 
did  not  marry  the  daughter  or  the  widow  of  a  master.  One 
gild  expelled  a  man  because  he  had  married  a  wife  whose 
grandmother  was  alleged  to  have  come  from  a  shepherd's 
family;  other  gilds  expelled  members  because  they  had  ridden 
an  executioner's  horse  or  drunk  with  an  executioner.  A  man 
had  at  best  to  pay  very  high  fees  to  become  a  master,  and 
this  artificial  restriction  on  the  number  of  full  members  not 
only  kept  the  ordinary  workmen  in  a  wretched  position,  but 
also  raised  the  price  of  goods  to  the  consumer. 


THE  GERMAN  STATES  257 

The  monopoly  of  the  gilds  became  more  oppressive  all  the 
time.  Most  of  their  money,  except  the  considerable  part  they 
spent  in  carousing,  they  used  in  lawsuits  and  in  quarrels  with 
rivals.  For  miles  around  a  German  town  the  gilds  permitted 
no  competitors,  and  they  made  it  a  regular  part  of  their  busi- 
ness to  hunt  down  and  exterminate  independent  producers. 

298.  The  eighteenth  century  marked  by  general  depression, 
with  some  signs  of  improvement.  —  In  Germany,  in  general, 
there  was  little  improvement  in  conditions  in  the  eighteenth 
century.     The  country  was  still  intersected  with  tariff  barriers. 
The  Rhine  was  cut  into  four  sharply  defined  parts,  and  the 
Elbe,  by  reason  of  tolls,  had  lost  its  trade  in  some  wares  of  the 
first  importance:  steel,  iron,  copper,  olive  oil,  wine,  fish,  etc. 
To  the  conflicts  between  cities  there  was  still  no  end.     The 
cities   of   southern   Germany,   weighted   with  taxes  and  sur- 
rounded by  closed  markets,  declined  still  more  in  commercial 
importance.     There    were,    however,    some    hopeful    signs    of 
progress.     Two  cities  of  the  interior,  Frankfort  on  the  Main 
and  Leipzig,  were  building  up  a  business  which  rested  not  only 
on  trade  in  wares  but  on  dealings  in  bills  of  exchange,  currency, 
commercial  loans,  etc.     Beside  the  rise  of  these  banking  centers 
special  importance  attaches  to  the  revival  of  commerce  on 
the  coast  of  the  North  Sea.     Hamburg  and  Bremen  seized  the 
opportunity   offered    by   the   American    Revolution   and   the 
European  wars  to  which  it  gave  rise  to  extend  their  trade  as 
neutral   carriers,   and  had  soon  passed  their  old  rivals,  the 
Dutch. 

299.  The  rise  of  Prussia  important  mainly  from  the  political 
standpoint.  —  Taking  German  commerce  as  a  whole,  we  leave 
it  in  1800  still  depressed  and  sluggish.     The  picture  would  be 
incomplete,  however,  if  nothing  more  were  said.     In  one  part 
of  Germany  there  had  been  great   activity   for  centuries;  hi 
the  North  and  East,  namely,  where  the  ancestors  of  the  present 
Emperor  William  II  were  building  up  the  state  of  Prussia. 
This  activity,  however,  was  mainly  political,  and  the  history 
of  it  does  not  belong  here;  we  can  refer  to  it  only  as  a  most 


258  A  HISTORY  OF  COMMERCE 

remarkable  example  of  state-making,  in  which  commercial  and 
industrial  interests  were  made  subordinate  to  the  establishment 
of  a  strong  government  over  a  united  people.  The  Hohen- 
zollern  rulers  did  not  succeed  in  making  a  rich  state  out  of  a 
group  of  scattered  territories  of  which  some  were,  in  natural 
resources,  among  the  poorest  in  Germany.  They  did  make  .a, 
strong  state,  which  won  for  itself  a  place  among  the  great 
powers,  and  later  took  the  lead  in  unifying  Germany. 

There  was  a  moment  in  the  history  of  the  Hohenzollerm 
when  it  seemed  possible  that  they  might  anticipate  the  idea  of 
William  II:  "Our  future  lies  upon  the  water."  If  the  Great 
Elector  (1640-1688)  had  secured  the  Pomeranian  coast  of  the 
Baltic  or  kept  even  Stettin,  he  might  have  realized  the  plans 
he  held  to  turn  Prussia  into  a  sea  power,  with  fleet,  colonies, 
and  transmarine  commerce.  Fortune  fixed  the  interests  of 
the  state  on  land,  however,  and  when  a  good  Baltic  harbor 
was  secured  later  it  was  too  late  to  change.  Frederick  the 
Great  was  urged,  a  century  afterward,  to  direct  his  policy  to 
the  sea,  and  actually  founded  some  companies  for  trade  with 
the  East,  but  the  time  had  passed,  or  had  not  yet  come,  for 
the  success  of  Prussia  in  oceanic  trade. 

300.  Reforms  in  Prussia  favoring  economic  development.  — 
In  regard  to  their  internal  conditions,  however,  the  territories 
of  the  Prussian  state  enjoyed  a  great  advantage  over  others 
in  Germany.  The  obstacles  to  trade  in  the  form  of  tolls  and 
staples  were  removed  when  political  interests  did  not  require 
their  maintenance.  The  tariff  systems,  enormously  compli- 
cated and  cumbrous,  were  revised.  The  growth  of  manufac- 
tures was  furthered  by  attracting  skilled  artisans  from  other 
countries;  and  the  city  of  Berlin  received  a  great  stimulus 
from  the  Huguenots  who  found  a  refuge  there.  Some  of  the 
worst  abuses  of  the  gilds  were  reformed,  and  manufactures 
were  protected,  as  in  France,  by  customs  duties  and  by  royal 
privileges.  New  methods  were  applied  in  agriculture,  and 
new  land  was  opened  to  settlement  and  cultivation;  a  large 
number  of  the  laborers,  however,  still  remained  unfree.  It 


THE  GERMAN  STATES  259 

would  be  easy  to  add  many  details,  but  in  closing  this  section 
on  Germany  the  reader  is  again  advised  that  the  important 
side  of  Prussian  history  in  this  period  was  political,  not  eco- 
nomic. Prussia  was  preparing  herself  for  the  work  of  unifying 
Germany,  and  to  accomplish  that  work  a  strong  government 
was  needed  rather  than  a  rich  people.  The  riches  have  come 
to  Germany  in  our  own  time. 

301.  Contrast   of   Prussia   and   Austria.  —  Prussia   was   a 
state  which  started  in  the  heart  of  Germany  (near  Berlin), 
and  remained  almost  entirely  German  as  it  spread.     Austria, 
on  the  other  hand,  was  originally  a  territory  on  the  southern 
border  of  the  German  people,  the  rulers  of  which  managed  by 
skill  and  luck  to  extend  their  power  over  fragments  of  adjoining 
peoples  of  a  different  stock,  over  Bohemians  and  other  Slavs 
(relatives  of  the  Russians),  and  over  the  Magyars  or  Hun- 
garians  (relatives  of  the  Turks).     These  other  peoples  were 
behind  the  Germans  in  their  industrial  development;  they  had 
come  into  Europe  later,  had  been  less  subject  to  civilizing 
influences  and  more  exposed  to  internal  quarrels  and  wars. 
Furthermore,  the  Austrian  Germans  were  behind  the  other 
Germans,  on  whom  they  were  industrially  dependent  in  the 
sixteenth  century.     Germans  from  the  North  took  their  manu- 
factures into  Austria  for  sale,  carried  on  the  trade  of  Austria 
and  controlled  the  mines  of  Austria. 

302.  Political  factors  hindering  development  of  the  lands 
subject   to   Austria.  —  The   territories   subject   to   the   ruling 
family  of  Austria,  the  Hapsburgs,  began  the  period,  therefore, 
in  a  backward  condition,  and  they  had  no  opportunity  through- 
out the  period  to  c#tch  up.     Internal  trade  was  hindered  not 
only  by  the  national  diversity  of  German,  Slav,  and  Magyar, 
but  also  by  the  persistence  of  provincial  tariffs,  which  under- 
went no  important  reform  until  nearly  1800,  and  which  were 
not  abolished  even  then.     Austria  did  not  suffer  so  much  as 
Germany  from  civil  war,  but  like  Germany  went  through  the 
crisis  of  the  religious  wars,  which  nearly  ruined  Bohemia;  and 
had  a  plague  of  its  own  in  resisting  the  advance  of  the  Turks 


260  A   HISTORY  OF  COMMERCE 

from  the  Balkan  Peninsula.  Austria  suffered  like  France, 
moreover,  from  an  absolute  government  which  too  often  used 
the  national  resources  in  the  interests  of  the  royal  family  and 
not  in  the  interests  of  the  people  as  a  whole. 

303.  Slow   progress   of   industry   and   commerce.  —  It    is, 
therefore,  not  surprising  that  in  1700  Austria  stood  commer- 
cially in  about  the  same  position  it  had  occupied  two  centuries 
before.     The  country  exported  the  raw  products  of  industry, 
wool,  flax,  linen,  hides,  copper,  etc.,  and  received  them  again 
after  they  had   been   manufactured    by   other   peoples.     An 
economist  of  the  time  said  that  the  total  manufactures  of 
Austria  were  not  equal  to  those  of  a  single  Dutch  city  like 
Leyden.     Even  this  small  amount  of  manufacture  was  con- 
trolled by  gilds,  and  suffered  from  the  characteristic  faults  of 
the  gild  system. 

In  the  eighteenth  century,  however,  the  government  began 
to  appreciate  the  importance  of  national  commercial  develop- 
ment. It  fought  the  claims  to  monopoly  put  forward  by  the 
gilds,  and  encouraged  manufacturers  to  extend  their  business, 
by  premiums  and  privileges,  as  in  France  and  Prussia.  Aus- 
trian iron  and  steel  wares  made  a  place  for  themselves  in 
commerce;  the  cloth  industry  of  Bohemia,  once  ruined  by  war, 
revived  again  under  the  factory  system;  stockings,  glass, 
porcelain,  etc.,  were  produced  in  increasing  quantities. 

304.  Attempts  of  the  government  to  stimulate  development. 
—  The  government  stimulated  the  development  of  manufac- 
ture by  its  customs  tariffs  as  well  as  by  its  internal  policy. 
The  duties  on  articles  which  the  government  thought  could  be 
made  at  home  were  raised  rapidly,  especially  after  1700,  and 
became  in  many  cases  prohibitory.     Undoubtedly  the  growth 
of  manufactures  was  furthered  by  this  policy,  though  many 
industries  betrayed  the  weakness  of  their  origin  by  failing 
after  a  short  period  of  apparent  prosperity.     The  tariff  gave 
rise,  however,  to  much  smuggling  and  corruption,  and  injured 
greatly  some  parts  of  the  country:  the  Tyrol,  which  lies  between 
Italy  and  Germany  and  had  prospered  on  the  transit  trade; 


THE  GERMAN  STATES  261 

and  sections  like  Hungary  which  produced  only  raw  mate- 
rials, 

To  atone  in  some  measure  for  these  necessary  results  of  a 
protective  system,  the  government  attempted  also  to  extend 
aid  to  foreign  commerce.  Triest  and  Fiume  were  made  free- 
ports,  i.e.,  they  were  put  on  the  outside  of  the  tariff  frontier 
to  attract  trade.  Venice  was  forced  to  renounce  her  claim  to 
the  exclusive  right  to  navigate  the  Adriatic,  and  commercial 
treaties  were  made  with  Turkey,  Russia,  and  states  in  northern 
Africa.  Consuls  were  sent  out  to  represent  Austrian  interests 
in  foreign  counries,  and  attempts  were  made  to  secure  a  share 
even  in  the  trade  with  India. 

305.  Austrian  commerce  still  backward  in  1800. —  Still 
Austrian  trade  attained  no  great  development.  The  govern- 
ment which  gave  with  one  hand  took  with  the  other.  Special 
privileges  did  not  make  up  for  the  general  weakness  of  the 
productive  organization.  Rulers  complained  that  in  spite  of 
all  their  efforts  commerce  languished.  Most  of  the  foreign 
trade  was  absorbed  by  five  companies,  which  divided  the  field. 
Two  of  them  were  limited  locally,  trading  with  Turkey  and 
with  Asia  Minor  respectively;  while  the  other  three  traded  in 
special  wares  with  various  countries.  One  imported  colonial 
wares  like  sugar;  another  exported  linens;  while  the  third 
exported  various  raw  materials  to  Italy,  France,  and  Spain. 
During  the  wars  beginning  in  1776  Austrian  merchants 
attempted  to  build  up  a  trade  with  North  America,  and  an 
agent  of  the  government  was  installed  at  Philadelphia  in  1783, 
but  during  the  following  years  of  peace  Austria  had  no  chance 
of  success  in  competition  with  trade  rivals. 

QUESTIONS  AND  TOPICS 

1 .  Write  a  report  on  the  political  constitution  of  Germany  at  the  end 
of  the  Middle  Ages,  and  the  resulting  conditions.     [Baring-Gould,  Story 
of  Germany,  chaps.  46,  52;  Seebohm,  Prot.  rev.,  26-33;  Janssen,  Hist., 
vol.  2,  book  4,  chap.  1;  Freytag,  Pictures,  XVIIIth  cent.,  vol.  1,  chap.  4.] 

2.  Development  of  business  and  business  methods  at  the  beginning 
of  the  period.     [See  above,  chap.  18;  Cunningham's  chapter  on  Economic 


262  A  HISTORY  OF  COMMERCE 

change  in  Cambridge  mod.  hist.,  vol.  1;  Janssen,  Hist.,  vol.  2,  book  3, 
chap.  3;  Freytag,  Pictures,  XVth  cent.,  vol.  1,  chap.  10.] 

3.  Condition  of  manufacturing.     [Janssen,   Hist.,   vol.   2,   book   3, 
chap.  2.] 

4.  Condition  of  agriculture.     [Janssen,  Hist.,  vol.  1,  book  3,  chap.  1.] 

5.  Decline  of  the  Baltic  trade.     [Zimmern,  Hansa  towns,  period  3.) 

6.  Decline  of  the  Hansa  in  England.     [Zimmern,  324-353  ] 

7.  Write  a  brief  report  on  the  commercial  history  of  (a)  Nuremberg, 
(6)  Augsburg.     [Encyc.;  Guide  books  of  south  Germany.] 

8.  Class  conflicts,  political  and  economic  troubles  about  1500.     [See- 
bohm,  **  Prot.    rev.,    136-140;    Janssen,  Hist.,   vol.  4,  book  7;  Frank 
Goodrich,   *  A  social  reformer  of  the  fifteenth  century,  Yale  Review, 
Aug.,  1896,  5:  168-181.] 

9.  Do  the  Germans  control  the  mouths  of  all  the  rivers  mentioned 
in  sect.  295  at  the  present  time? 

10.  Write  a  report  on  the  effects  of  the  Thirty  Years'  War,  from  the 
economic  and  commercial  standpoint.     [S.  R.  Gardiner;  Thirty  Years' 
War  (Epoch  Ser.),  N.  Y.,  1874,  217-221;  Anton  Gindely,  Hist,  of  the 
Thirty  Years'  War,  N.  Y.,  1884,  vol.  2,  chap.  11;  Freytag,  Pictures,  XVth 
cent.,  vol.  2,  chaps.  3,  5,  6.] 

11.  Write  a  brief  report  on  the  commercial  history  of  one  of  the 
following  towns:  Frankfort  on  the  Main,  Leipzig  (or  Leipsic),  Hamburg, 
Bremen.     [Encyc.;  Homans,  Cyc.  of  commerce,  for  the  early  nineteenth 
century.] 

12.  Effect  of  the  protective  tariff  in  building  up  the  Prussian  silk 
industry.     [Schmoller,  Merc,  syst.,  pp.  81-91.] 

13.  Indicate  on  a  sketch  map  of  Austria-Hungary  the  spaces  occu- 
pied by  the  following  peoples:  Germans,  Bohemians,  Ruthenians,  Hun- 
garians, Southern  Slavs.     [Atlas,  Encyc.] 

14.  The  wars  with  the  Turks:  how  long  did  they  last;  how  far  did  the 
Turks  penetrate  Europe;  what  was  the  effect  on  industry?     [S.  Whitman, 
Austria,  N.  Y.,  Putnam,  1899,  $1.50,  chap.  16;  E.  A.  Freeman,  Ottoman 
power  in  Europe,  London,  1877,  chaps.  4,  5.] 

15.  Reforms  in  Austria  in  the  eighteenth  century,  and  their  effect. 
[L.  Leger,  Hist,  of  Austro-Hungary,  N.  Y.,  Putnam,  1889,  379  ff .,  388  ff .]. 

16.  Write  a  brief  report  on  the  commercial  history  of  Vienna.    [Encyc.] 

BIBLIOGRAPHY 

Writings  in  German  are  voluminous;  English  books  on  the  history  o': 
the  period  are  concerned  almost  entirely  with  political  affairs.  The 
translation  of  Janssen 's  *  History,  St.  Louis,  Herder,  1897  ff.,  can  be 
recommended  for  the  beginning  of  the  period,  and  Freytag's  *  Pictures  of 
German  life,  London,  1862,  contains  some  readable  and  useful  descriptions. 


CHAPTER  XXVII 


ITALY  AND  MINOR  STATES 

306.  Political  condition  of  Italy  in  the  modern  period.  —  In 

the  history  of  Germany  we  have  seen  the  fate  of  a  country 
that  entered  the  modern  period  lacking  a  political  organization 
that  would  enable  it  to  hold  its  own  in  competition  with  rivals. 
The  history  of  Italy  in  this  period  presents  the  same  conditions 
and  the  same  results.  At  the 
end  of  the  Middle  Ages  there 
were  five  important  states  in 
the  peninsula:  Milan,  Venice, 
Florence,  Rome,  and  Naples. 
None  was  strong  enough  to 
unite  the  country;  each  was 
strong  enough  to  prevent 
another  from  reaching  that  end. 
The  border  territory  of  Savoy, 
whose  rulers  have  united  the 
peninsula  in  recent  times,  re- 
solving, in  the  words  of  one,  to 


ITALY  1515 


"treat  Italy  as  an  artichoke,  to  be  eaten  leaf  by  leaf,"  counted 
as  yet  for  little.  The  quarrels  of  the  Italian  states  invited  inter- 
ference by  stronger  neighbors,  Spanish,  French,  and  Austrian; 
and  Italy  became  the  prey  of  adventurers  and  tyrants  who 
lived  as  parasites  on  the  resources  that  should  have  nourished 
industry  and  commerce. 

307.  Position  of  Venice  at  the  beginning  of  the  period.  — 
Venice,  which  had  enjoyed  the  commercial  primacy  among  the 
Italian  states,  saw  in  the  Portuguese  discoveries  a  threat  to 
her  prosperity  which  only  the  strongest  measures  could  avert. 

263 


264  A   HISTORY  OF  COMMERCE 

There  was  no  physical  reason  why  Venice  should  not  adopt 
the  sea  route  to  India,  and,  if  necessary,  fight  with  the  Portu- 
guese for  the  Indian  trade  at  its  source.  All  her  traditions, 
however,  pointed  the  other  way;  all  her  investments  were 
tied  up  in  the  route  through  Egypt;  and,  most  important,  all 
her  resources  were  required  in  the  Mediterranean.  The  island 
city  had  been  drawn  into  an  expansion  on  the  mainland  which 
involved  her  in  continental  intrigues  and  sapped  her  strength 
at  sea,  at  the  very  time  when  her  sea  power  was  of  the  greatest 
importance;  the  navy  of  the  Ottoman  Turks  was  rapidly  de- 
veloping and  the  scourge  of  the  Barbary  pirates  (from  the 
Mediterranean  coast  of  Africa)  had  begun. 

308.  Blows  at  Venetian  trade  both  by  sea  and  land  routes 
to  India.  —  For  a  moment  Venice  halted  undecided  between 
the  two  routes.  Venetian  ambassadors  were  especially  in- 
structed to  procure  maps,  letters  from  voyagers,  and  all  other 
information  that  would  help  the  home  government  determine 
its  policy  with  respect  to  the  recent  developments.  Venice 
made  repeated  attempts  to  buy  from  Portugal  the  right  to 
dispose  of  all  the  spices  brought  to  Lisbon,  a  proposition  that 
naturally  was  declined.  Venice  had  to  buy  in  small  lots,  on 
what  terms  the  Portuguese  chose  to  set;  more  and  more  silver 
flowed  from  Italy  to  Lisbon,  and  it  became  increasingly  difficult 
to  get  spices  in  Venice.  Meanwhile  the  government  was 
sending  explorers  eastward,  in  the  hope  of  opening  one  of  the 
old  routes  to  trade,  and  seriously  considered  for  a  time  the 
piercing  of  the  Suez  isthmus  with  a  canal.  Venice  found  the 
Ottoman  Turks  favorable  to  trade  through  their  dominions,  but 
had  not  the  strength  to  maintain  her  old  commercial  connec- 
tions when  Cairo  was  finally  captured  by  the  Turks  in  1517. 
309.  Relative  decline  of  Venetian  commerce.  —  From  this 
time  the  energies  of  Venice  were  absorbed  in  an  unequal 
conflict  with  the  Turks  in  the  eastern  Mediterranean.  Venice 
had  prepared  herself  in  a  measure  for  the  Turkish  advance,  by 
removing  her  chief  staple  from  Alexandria  to  the  island  of 
Cyprus,  but  this  too  was  lost  in  1571  after  a  heroic  defense. 


ITALY  AND  MINOR  STATES  265 

The  battle  of  Lepanto  and  others  following  it  were  empty 
victories;  on  the  east  coast  of  the  Mediterranean  Venice  had 
to  surrender,  and  consent  to  trade  on  the  terms  which  the 
Turks  imposed.  Trade  was  still  maintained.  Aleppo  became 
in  the  later  period  a  market  in  which  the  Venetians  had  great 
establishments,  drawing  thence  the  wares  that  came  by  caravan 
from  Bagdad,  Persia,  and  India.  Venice  herself  became  con- 
stantly more  beautiful,  and  was  in  the  seventeenth  century, 
as  now,  one  of  the  show-places  of  Europe,  where  foreign  visitors 
flocked  by  thousands.  Her  manufactures  of  glass  and  silk 
and  many  artistic  luxuries  remained  unexcelled.  It  is,  how- 
ever, by  quantity  and  not  quality  that  we  measure  the  greatness 
of  a  state's  commerce;  Venetian  trade  scarcely  entitled  the  city 
to  a  place  even  in  the  second  rank  of  commercial  states,  when 
it  finally  lost  its  independence  in  1797. 

310.  Decline  of  commerce  and  industry  in  Tuscany.  —  The 
history  of  decline  in  other  parts  of  Italy  must  be  dismissed 
more  briefly.     Florence,  which  at  the  beginning  of  this  period 
ranked  next  to  Venice  in  manufactures,  trade,  and  banking, 
found  the  markets  of  northern  Europe  closed  by  the  Dutch 
revolution,  by  the  religious  wars  and  by  the  tariff  barriers 
of  the  protective  policy.     Bankruptcy  became  frequent  in  the 
latter  part  of  the  sixteenth  century.     The  woolen  manufac- 
tures of  Florence,  which,  it  is  said,  employed  30,000  men  in 
1338,  employed  971  in  1767.     Hampered  not  only  by  weakness 
abroad  but  also  by  restrictive  legislation  at  home,  the  Tuscan 
people  declined  to  poverty  and  indolence.     Prosperity  was  to 
be  found  in  only  one  spot,  the  city  of  Leghorn,  which  had 
been  made  a  free  port;  but  this  city  prospered  just  because  it 
had  been  placed  on  the  outside  of  Tuscany,  and  the  riches 
amassed  there  went  largely  into  the  hands  of  foreign  residents. 

311.  Decline  in  other  parts  of  Italy.  —  South  of  Tuscany 
conditions  grew  still  worse.     The  Roman  territory  had  never 
been  of  commercial  importance,  and  the  Neapolitan  territory 
lost  in  this  period  what  prosperity  it  had  once  had.     Under  a 
Spanish  government,  which  was  almost  incredibly  bad,  the 


266  A  HISTORY  OF  COMMERCE 

national  resources  were  wasted  abroad  while  Turks  ravaged 
the  coast,  kidnapping  slaves,  at  home;  and  the  producing 
classes  were  crushed  by  heavy  and  unfair  taxes. 

North  of  Tuscany  conditions  were  little  better.  The  report 
of  a  commercial  agent  who  was  sent  by  the  Austrian  state  to 
investigate  upper  Italy  in  1754  shows  commercial  weakness 
everywhere.  The  country  was  divided  by  tariff  barriers  into 
a  great  number  of  distinct  territories,  of  which  scarcely  any 
were  large  enough  to  give  play  for  the  development  of  indus- 
tries which  they  were  endeavoring  to  protect.  The  forces  of 
industry  and  commerce  were  scattered  and  lost  among  a  great 
number  of  small  towns,  and  trade  was  largely  controlled  by 
foreigners,  both  Jewish  and  Christian. 

312.  Conditions  in  the  Scandinavian  countries.  —  It  would 
be  unprofitable  to  attempt  here  to  trace  the  course  of  com- 
merce in  all  the  other  states  of  Europe  during  this  period,  and 
this  part  of  the  book  will  close  with  a  brief  description  of 
commercial  conditions  in  the  North  and  East.  The  districts 
included  in  Scandinavia  are  already  familiar  to  the  reader  as 
forming  an  important  field  for  the  Hanseatic  trade  in  the 
Middle  Ages.  The  population  was  sparse,  industry  was  unde- 
veloped, towns  were  few  and  small;  the  knowledge  and  capital 
necessary  for  an  active  independent  trade  were  lacking,  and 
people  were  content  to  stay  at  home  and  let  foreign  merchants 
come  to  them  with  manufactures  and  take  away  their  surplus 
products.  The  iron  industry  of  Sweden,  favored  by  rich  ores, 
extensive  forests  for  fuel  and  abundant  water  power,  attained 
considerable  importance;  but  the  exports  continued  in  general 
to  be  raw  materials,  especially  those  used  in  food  and  for  ship 
building.  Governments  attempted  to  hurry  the  development 
of  their  peoples  by  protective  duties  and  by  the  founding  of 
commercial  companies,  with  slight  success.  Gustavus  Adol- 
phus,  a  king  of  Sweden  in  the  seventeenth  century,  formed  the 
bold  project  of  making  the  Baltic  "a  Swedish  lake,"  by  control 
of  the  entrance  and  the  coasts,  but  his  successors  proved  unable 
to  maintain  the  position  which  he  won.  The  keys  of  the  Baltic 


ITALY  AND  MINOR  STATES  267 

fell  into  the  hands  of  Denmark,  and  that  country  made  a  good 
profit  by  collecting  tolls  on  the  flow  of  a  trade  to  which  it 
contributed  little  itself. 

313.  Rise  of  Russia  to  a  position  among  the  European 
states  about  1700.  —  Russia  was  even  more  backward  than 
the  Scandinavian  states.     Like  them  it  had  been  dependent 
on  the  Hanseatic  merchants  for  its  commerce  with  western 
Europe,  and  remained  passive  after  their  fall,  accepting  what 
wares  reached  it  overland  or  through  the  port  of  Archangel  on 
the  Arctic  coast,  whither  English  and  Dutch  shippers  ventured. 
Until  Peter  the  Great  opened  his  "window  on  the  West,"  by 
the  founding  of  St.  Petersburg  on  the  Baltic  about  1700,  Russia 
was  hardly  a  European  state.     Peter  attempted,  with  remark- 
able energy,  to  bring  Russia  to  the  European  standard  in 
commerce  and  industry  as  well  as  in  politics.     He  reformed, 
though  he  did  not  abolish,  the  system  which  gave  the  Czar  a 
monopoly  of  trade  in  the  most  important  wares;  he  revised 
the  tolls  on  trade;  he  sent  young  men  abroad  to  study  com- 
merce, and  tried  in  other  ways  to  elevate  the  merchant  class. 
Peter  did  not  succeed  in  his  attempt  to  free  Russian  commerce 
from  its  dependence  on  western  merchants,  and  his  attempt 
to  build  up  a  merchant  marine  was  a  failure.     In  the  East, 
Russian   commerce   fared   better.     Occasional    caravans    had 
gone  before  this  from  Siberia*  to  China.     The  Czar  now  sent 
on  his  own  account  caravans  which  consumed  three  years  on 
the  long  trip  from  Peking  to  Moscow;  and  individuals  developed 
the  trade  which  the  crown  had  stimulated. 

314.  Character   of   Russian   commerce   in   the   eighteenth 
century.  —  Russia  could  be  regarded  in  the  eighteenth  century 
as  a  European  state.     It  belonged,  however,  to  the  Europe  of 
the  Middle  Ages  rather  than  of  the  modern  period.     Most  of 
the  population,   including  even  the  few  who  were  occupied 
with  manufacturing,  were  serfs.     The  people  as  a  whole  were 
on  a  low  standard  of  living,  and  were  densely  ignorant.     Com- 
mercial law  was  undeveloped,  and  trading  practices  were  those 
of  a   half  civilized   community.     The  government   interfered 


268  A  HISTORY  OF  COMMERCE 

with  exchange  by  arbitrary  and  vexatious  restrictions.  The 
country  could  export,  with  rare  exceptions,  only  raw  products. 
From  China  it  imported  tea,  silk,  gold,  jewels,  etc.,  of  which 
only  a  part  was  kept  at  home;  while  it  was  dependent  on 
western  Europe  for  most  of  its  colonial  wares  (sugar,  coffee, 
spices,  and  drugs),  and  for  all  the  finer  manufactures  (textile, 
metal,  pottery,  paper,  etc.). 

QUESTIONS  AND  TOPICS 

1.  Condition  of  Italy  about  1500.     [Seebohm,  Prot.  rev.,  21-26. 
with  sketch-map.] 

2.  Venice  about  1500:    commerce,  government,  policy  on  sea  and 
land.    [Horatio  F.  Brown,  Venice,  chaps.  16, 17;  or  Cambridge  mod.  hist., 
vol.  1,  chap.  8,  by  the  same  author.] 

3.  Contest  of  Venice  with  the  Turks.     [Brown,  Venice,  chap.  19.] 

4.  Decline  of  Venetian  commerce.  [A.  H.  Lybyer,  The  Ottoman  Turks 
and  the  routes  of  Oriental  trade,  English  Hist.  Rev.,  Oct.,  1915,  30: 
577-588.] 

5.  Attempt  of  Gustavus  Adolphus  to  make  of  Sweden  a  great  power. 
[Encyc.  Brit.,  Gustavus  II.] 

6.  Social  and  economic  conditions  in  Russia  about  1700.     [W.  R. 
Morfill,  Story  of  Russia,  N.  Y.,  Putnam,  1900,  $1.50,  chap.  13;    H.  M. 
Thompson,  Russian  politics,  N.  Y.,   1896,  chap.  2.] 

7.  History  of  Russia  in  the  eighteenth  century.    [Manuals  of  Euro- 
pean history;    Thompson,  chap.  3.] 

BIBLIOGRAPHY 

Aside  from  fragmentary  sections  in  the  current  manuals  the  reader 
of  English  will  find  little  literature  available  on  the  history  of  commerce 
in  the  minor  states.  Such  suggestions  for  collateral  reading  as  are  given 
above  will  probably  satisfy  the  needs  of  students  who  are  not  sufficiently 
advanced  to  use  foreign  languages. 

TOPICS  FOR  REVIEW 

After  covering  the  history  of  commerce  in  different  countries  the 
student  will  find  it  profitable  to  review  certain  general  topics,  piecing 
together  what  he  has  learned  of  their  local  history  and  endeavoring  to  get 
a  clear  conception  of  the  general  development.  The  following  are  sug- 
gested for  study  in  the  modern  period  (1500-1800) :  (a)  shipping;  (6)  trans- 
portation on  roads  and  rivers;  (c)  production  and  exchange  of  foodstuffs; 
(d)  production  and  exchange  of  textile  materials  (flax,  wool,  cotton, 
silk);  (e)  production  and  exchange  of  finished  textiles  (linen,  woolen, 


ITALY  AND  MINOR  STATES  269 

cotton,  silk);  (/)  production  and  exchange  of  iron;  ({/)' development  of  the 
system  of  manufactures  (gild,  domestic  and  factory  systems) ;  (h)  develop- 
ment of  banking;  (t)  effect  of  wars  on  the  commerce  of  different  countries; 
(/)  European  colonial  systems;  (k)  commercial  policy;  (I)  trade  of  Europe 
with  Asia;  (m)  trade  of  Europe  with  North  and  South  America. 


PART  IV.— RECENT  COMMERCE 
CHAPTER  XXVIII 

COMMERCE  AND   COAL 

315.  Statistical  survey  of  development  since  1800.  —  In 

entering  the  nineteenth  century  the  student  approaches  the 
period  in  which  commerce  has  achieved  the  most  notable 
progress.  Great  as  former  advances  may  have  seemed  to  the 
people  in  whose  time  they  occurred,  these  sink  almost  to 
insignificance  when  compared  with  the  growth  of  commerce 
since  1800.  A  recent  estimate  by  a  German  author  pictures 
the  progress  of  the  export  and  import  trade  of  the  commercial 
countries  of  the  world  as  follows,  in  milliards  of  marks  (roughly, 
units  of  250  million  dollars):  1700,  0.5;  1750,  1.0;  1800,  6; 
1850,  17;  1899,  76.  Some  of  the  striking  features  of  recent 
growth  are  shown  in  the  following  table.  It  is  necessary, 
however,  to  warn  the  student  that  these  figures,  especially 
those  for  the  earlier  part  of  the  century,  can  be  regarded  only 
as  approximations  to  the  truth.  It  may  not  be  out  of  place, 
further,  to  advise  the  student  to  turn  to  the  end  of  the  chapter 
for  suggestions  as  to  the  best  way  of  studying  the  figures. 

316.  Great  growth  of  foreign  commerce.  —  Assuming,  for 
purposes  of  discussion,  a  fair  degree  of  accuracy  in  the  figures, 
some  conclusions  from  them  may  be  pointed  out.    The  com- 
merce of  the  world  increased  in  this  century  at  the  astonishing 
rate  of  1,359  per  cent.    We  have  before  encountered  instances 
of  remarkable  commercial  expansion,  in  particular  countries, 
but  we  must  bear  in  mind  that  the  figures  here  are  supposed 
to  include  the  whole  world,  the  backward  as  well  as  the  pro- 
gressive countries,  the  many  millions  in  the  interior  of  great 
continents  who  scarcely  trade  at  all,  and  the  Chinese,  perhaps 
in  themselves  a  quarter  of  the  world's  population,  who  trade 

270 


COMMERCE  AND   COAL 


271 


still  to  but  a  slight  extent.  Clearly  the  growth  of  commerce 
in  some  countries  must  have  been  enormous  to  raise  the  total 
figures  to  the  point  at  which  we  find  them. 

FOREIGN  COMMERCE  AND  PRODUCTION  OF  THE  COUNTRIES  OF  THE  WORLD 


Year 

Aggregate 
'    Commerce 
Thousand 
Million  Dollars 

Per 
Capita 

Commerce 
Dollars 

Coal 
Production 
Million 
Tons 

Pig  Iron 
Production 
Million 
Tons 

1800  

1.4 

2.31 

11.6 

08 

1820  

1.6 

2.13 

17.2 

1.0 

1830    

1.9 

234 

25  1 

1  8 

1840  

2.7 

2.93 

44.8 

2.7 

1850  

4.0 

3.76 

81.4 

4.7 

I860  

7.2 

601 

1423 

7.2 

1870  

10.6 

8.14 

213.4 

11.9 

1880    .  .  . 

147 

1026 

340 

180 

1890  

17.5 

11.80 

466 

272 

1900  

20.1 

13.02 

800 

40.4 

1910  

33.6 

20.81 

1,141 

65.8 

1913  

40.4 

24.47 

1,443 

774 

317.  Increase  in  the  relative  importance  of  commerce. — 
Not  less  striking  than  this  growth  in  absolute  quantity,  as 
measured  in  current  values,  is  the  growth  compared  with  the 
estimated  increase  of  the  world's  population.  The  value  per 
capita  ("by  head")  of  a  country's  commerce  is  secured  by 
dividing  the  total  amount  of  trade  by  the  number  of  inhabi- 
tants; it  shows  the  average  share  of  each  person  in  commerce, 
and  furnishes,  therefore,  some  index  of  the  relative  importance 
of  commerce  in  different  times  and  places.  Now,  even  if  this 
value  per  capita  had  remained  the  same  we  should  regard  the 
absolute  increase  in  commerce  as  a  very  important  fact.  Com- 
merce^ however,  has  actually  increased  much  faster  than  popu- 
lation; the  share  of  the  average  human  being  in  the  world's 


trade  has  grown  over  tenfold.  Let  the  student  reflect  on 
the  difference  it  would  make  to  him  whether  he  had  $2  or  $20 
for  spending  money  in  a  given  time,  and  consider  the  extra 
articles  he  could  buy  with  the  larger  sum;  he  will  then  be  better 


272  A  HISTORY  OF  COMMERCE 

able  to  appreciate  the  broadening  and  deepening  of  the  com- 
mercial current  in  recent  times. 

318.  The  world  now  passing  through  a  commercial  revolu- 
tion. —  The  student  is  now  in  a  position  to  understand  the 
significance  of  the  statement  of  an  English  writer,  that  "the 
commerce  of  the  world  may  almost  be  said  to  be  the  creation 
of  the  past  seventy-five  years."     We  are  living  in  the  midst 
of  a  vast,  though  silent,  revolution.     Reference  to  the  figures 
will  show  that  the  process  of  change  quickened  strikingly  in 
the  latter  half  of  the  century,  and  at  its  close  we  still  do  not 
dare  to  say  when  the  movement  will  slacken.     The  change 
which  we  find  so  marked  in  commerce  affects  equally  other 
sides  of  human  life.     An  American  author,  Adams,  writing  in 
1871,  could  say  with  truth  that  "the  discoveries  of  Guttenberg 
and  Columbus  have  produced  more  startling  and  more  clearly 
defined  results  upon  the  destinies  of  the  human  race  within 
the  last  twenty-five  years  than  in  any  other  equal  period  of 
time  during  the  four  previous  centuries."     Have  the  results 
been  less  startling  in  the  quarter-century  that  followed?    An- 
other American  economist,  Wells,  said  about  1890,  "When  the 
historian  of  the  future  writes  the  history  of  the  nineteenth 
century  he  will  doubtless  assign  to  the  period  embraced  by 
the  life  of  the  generation  terminating  in  1885  a  place  of  im- 
portance, considered  in  its  relations  to  the  interests  of  humanity, 
second  to  but  very  few,  and  perhaps  to  none,  of  the  many 
similar  epochs  in  time  in  any  of  the  centuries  that  have  preceded 
it."     Is  the  generation  terminated  in  1915  willing  to  admit 
that  it  takes  a  less  important  place  in  history  than  its  pre- 
decessor? 

319.  Share  of  modern  countries  in  the  commerce  of  the 
world.  —  It  is  unnecessary,  I  hope,  to  say  more  to  impress 
upon  the  student  the  fact  that  a  period  of  great  change  in 
the  world's  history,  which  began  half  a  century  ago,  still  con- 
tinues; and  that  the  coming  generation  will  be  called  upon  to 
carry  on  this  change,  and  guide  it  for  the  welfare  of  humanity 
in  the  future.     Leaving,  therefore,  general  discussion  and  spec- 


COMMERCE  AND   COAL 


273 


ulation,  and  returning  to  the  concrete  and  well-defined  facts 
that  form  the  subject  of  our  study,  I  insert  in  this  place,  as 
likely  to  be  of  use  for  reference  later  and  of  interest  now  (though 
not  deserving  painstaking  study  as  yet),  a  table  showing  the 
share  of  different  countries  in  commerce  about  1900. 

RECENT  TRADE  OF  LEADING  COMMERCIAL  COUNTRIES 
(Approximate  annual  averages  in  millions  of  dollars,  special  trade) 


1891-1900 

1901-1910 

1912 

Imports 

Exports 

Imports 

Exports 

Percentage  of 
total  general 
trade  of  world 

United  Kingdom  .... 
Germany  

1725 
1140 
780 
835 
660 
362 
302 
276 
177 
255 

1190 
880 
1050 
710 
550 
309 
337 
339 
172 
219 

2525 
1800 
1185 
1065 
1020 
578 
464 
386 
201 
480 

1700 
1470 
1655 
995 
835 
453 
459 
503 
185 
343 

16.6 
12.9 
9.9 
9.0 
6.9 
4.2 
3.3 
3.5 
1.1 
3.1 

United  States  

France  

Holland  *  

Belgium  *   

Austria-Hungary  .... 
Russia  *  

Spain*    

Italy  

•Figures  are  averages  for  the  decade  1900-1909,  not  1901-1910. 

A  similar  statement,  showing  the  relative  rank  about  1850, 
would  present  only  one  very  striking  change;  France  held  at 
that  time  the  place  second  to  that  of  the  British  Empire,  and 
Germany  came  after  the  United  States. 

320.  Possible  explanations  of  recent  commercial  develop- 
ment. —  One  topic  of  prime  importance  demands  our  attention 
as  we  enter  on  the  study  in  detail  of  the  commerce  whose 
growth  has  been  sketched  above.  What  were  the  causes  of 
this  great  commercial  development?  When  we  know  them 
we  shall  truly  understand  the  commercial  history  of  the  past 
century,  and  shall  be  prepared  to  face  the  problems  of  the 
present  and  the  future. 

The  topic  will  be  discussed  under  the  heads  which  have 
been  employed  previously  in  similar  discussions.  The  advances 
have  been  achieved  either  by  a  gain  in  the  power  of  man  to 
control  nature  and  natural  forces  (technical  progress);  or  by 
the  more  efficient  cooperation  of  men  in  business  (industrial 


274  A   HISTORY  OF  COMMERCE 

and  commercial  organization),  or  in  politics  (political  organi- 
zation, domestic  and  foreign  policy). 

321.  Prime  importance  of  technical  factors,  especially  the 
use  of  coal.  —  Hard  as  it  is  to  disentangle  these  different 
factors,   all   of  which   have   contributed   much  to   the   recent 
progress  of  the  world,  there  need  still  be  no  question  which 
has   been  of  the  leading  importance  during  the  nineteenth 
century.     This  century  has  been  the  great   era   of  material 
invention,  of  scientific  discovery,  and  of  the  increase  in  power 
of   man   over  nature.     Technical   progress,   therefore,    is   the 
first"  subject  to  be  studied. 

Again,  there  need  be  no  question  as  to  which  feature  of 
technical  progress  holds  first  place.  Electrical  appliances? 
Machinery?  The  steam-engine?  Applied  chemistry?  All 
those  things,  with  the  vast  benefits  which  they  confer  on 
humanity,  rest  now  on  practically  one  basis:  coal.  Vegetable 
matter  of  past  geological  ages,  that  has  become  fossilized,  has 
undergone  mysterious  chemical  changes  and  has  shrunk  to 
one  tenth  of  its  former  bulk,  furnishes  now,  after  hundreds  or 
thousands  of  centuries,  the  means  by  which  we  maintain  and 
develop  pur  material  civilization  and  our  great  commerce. 

322.  Power  in  coal.  —  Coal  offers  men  what  all  men  seek, 
power.     There  is  "spring"  enough  hi  it,  when  properly  applied, 
to  raise  a  million  times  its  own  weight  a  foot  high.     A  man 
who  sends  a  horse  and  cart  to  fetch  a  ton  of  coal,  occupying 
four  hours  on  the  way,  secures  a  power  in  the  coal  theoretically 
2,800  times  that  expended  in  bringing  it;  and  can  probably 
get  from  it  an  amount  of  useful  force  exceeding  by  100  times 
or  more  that  of  the  horse  employed  in  carting.     A  few  decades 
ago  (1865),  W7hen  the  output  of  coal  was  far  less  than  it  is  now, 
an  English  economist  calculated  that  forests  of  an  area  two 
and  a  half  times  as  large  as  that  of  the  United  Kingdom  would 
be  required  to  furnish  even  a  theoretical  equivalent  of  the 
annual  coal  produce;  practically,  of  course,  the  use  of  wood 
for  an  equivalent  is  out  of  the  question.     It  was  estimated, 
somewhat  later  (before  1880),  that  if  the  whole  area  of  England 


COMMERCE  AND  COAL  275 

were  good  land,  devoted  solely  to  raising  forage,  it  would  not 
support  a  horse-power  equal  to  that  obtained  from  the  English 
coal  mines;  and  that  an  area  perhaps  ten  times  as  large  would 
be  required  for  the  mere  food  supply  of  human  beings  of 
equivalent  force. 

323.  Dependence  of  modern  industry  on  coal.  —  It  would 
be  a  great  mistake  to  consider  coal  necessary  now  only  in  its 
most  common  application,  that  of  generating  steam  for  engines. 
The  chemical  industry  depends  largely,  though  not  entirely, 
on  the  heat  obtained  from  coal,  to  break  down  its  raw  ma- 
terials and  build  up  its  finished  products.     Metallurgical  indus- 
tries would  shrink  almost  to  infinitesimal  proportions  if  they 
were  denied  the  use  of  coal.     It  has  been  estimated  that  the 
manufacture  of  a  ton  of  pig  iron  requires  the  use  of  two  tons 
of  coal  or  more;  while  an  equal  quantity  of  steel  requires  six 
to  eight  tons.     Still,  the  use  of  coal  for  the  steam-engine  is 
undoubtedly  its  most  important  application;  and  we  can  gain 
some  conception  of  the  place  that  coal  has  taken  in  the  world's 
economy  by  considering  the  growth  of  steam  power, 

324.  Importance  of  coal,  estimated  in  steam  horse-power.  — 
A  horse-power,  the  technical  unit  adopted  for  measuring  the 
working  capacity  of  an  engine,  is  for  practical  purposes  equal 
to  the  force  that  can  be  got  from  several  (perhaps  three)  horses, 
or  from  a  number  of  men  variously  estimated  at  ten  to  twenty- 
four.     Now  in  round  numbers  the  steam  horse-power  of  the 
wrorld  was  a  million  and  a  half  in  1840,  and  had  increased,  at 
the  end  of  the  century,  to  fifty  times  that  amount.     A  simple 
operation  in  arithmetic  will  show  the   amount    of  work,    in 
human  equivalent,  now  done  by  steam.    .Taking,  for  example, 
a  modern  country,  Germany,  we  find  engaged  in  industry  and 
transportation  slightly  over  ten  million  people,  while  we  find 
engaged  beside  them  another  population  of  mechanical  iron 
slaves  (steam-engines),  variously  estimated  as  equivalent  to 
one  hundred  to  two  hundred  and  fifty  million  people.     These 
slaves  cost  for  food  (coal),  attendance,  doctor's  bills  (repairs), 
and   burial   expenses    (including  the  cost   of  replacing  them 


276  A   HISTORY  OF  COMMERCE 

once  in  twenty-five  years),  only  about  $2.50  a  year  apiece. 
Admit  some  exaggeration  in  the  figures,  and  still  the  contrast 
with  the  cost  of  human  labor  is  most  striking. 

325.  Technical  history  of  the  steam-engine.  —  The  steam- 
engine  has  been  in  practical  use  in  Europe  since  about  1700. 
The  earliest  Engines,  however,  seem  ludicrously  crude  now, 
and  could  be  used  only  for_gumping  water.  Progress  was 
slow  until  the  last  part  of  the  eighteenth  century,  when  James 
Watt  introduced  improvements  /separate  condenser,  double- 
acting  piston,  use  of  cut-off,  etc.),  which  greatly  increased  the 
efficiency  of  the  engine,  and  caused  a  gradual  extension  of  its 
use  from  mining  to  manufactures.  The  introduction  of  the  non- 
condensing,  high-pressure  engine  about  1800  prepared  the  way 
for  the  use  of  steam  on  railroads.  The  compound  engine,  in 
which  the  steam  passes  through  two  or  more  cylinders  before 
it  is  allowed  to  escape,  was  invented  about  the  same  time, 
though  it  was  not  brought  into  general  use  until  about  1850. 
Since  then  improvements  in  details  of  the  engine  and  in  the 
form  of  boilers  have  enhanced  still  further  the  efficiency  of  steam 
power,  until  it  now  produces  about  two  thirds  of  the  work 
possible  under  ideal  conditions.  Practical  engineers  expect 
now  no  rapid  progress  or  startling  changes.  Some  measure  of 
the  progress  achieved  is  furnished  by  the  fact  that  Watt's 
engines  required  ten  pounds  of  coal  an  hour  for  each  horse- 
power, the  engines  of  the  next  generation  required  five,  while 
the  best  modern  engines  require  but  one  and  a  half,  or,  in 
rare  cases,  one. 

The  previous  paragraph  referred  to  the  reciprocating  en- 
gine in  which  the  piston  moves  constantly  forward  and  back. 
Since  rotary  motion  is  the  form  in  which  the  power  is  commonly 
transmitted  and  applied,  it  would  be  desirable  to  get  the 
motion  in  this  form  originally,  and  many  attempts  have  been 
made  to  make  rotary  engines.  Success  has  been  attained  in 
the  case  of  the  steam  turbine,  in  which  jets  of  steam  strike 
against  the  blades  of  a  turbine  wheel,  and  cause  it  to  revolve. 
Originally  applied  by  Dr.  De  Laval  of  Sweden  to  operate  the 


COMMERCE  AND  COAL  277 

centrifugal  cream  separator  which  he  had  devised,  it  has  come 
into  common  use  for  the  generation  of  electricity  and  for  the 
propulsion  of  ships.  While  the  steam  turbine  has  proved  its 
efficiency  for  special  purposes  it  is  less  adaptable  than  the 
old  form  of  reciprocating  engine,  and  still  leaves  to  that  the 
larger  part  of  the  field. 

326.  The  internal  combustion  engine.  —  In  the  ordinary 
power  plant  there  are  two  units,  the  boiler  in  which  steam 
is  generated,  and  the  engine  in  which  the  steam  is  put  to  work. 
An  internal  combustion  engine  is  designed  to  burn  the  fuel  in 
the  engine  itself.  This  is  practicable  when  the  fuel  is  a  gas  or 
a  liquid  whose  vapor  will  unite  with  the  oxygen  of  the  air  to 
form  an  explosive  mixture.  The  internal  combustion  engine 
offers  several  advantages  over  the  steam  power  plant:  it  uses 
more  effectively  the  heat  that  is  generated,  it  is  less  bulky, 
it  is  more  easily  tended.  In  spite  of  characteristic  disadvan- 
tages, particularly  the  need  of  an  auxiliary  starter,  and  restricted 
flexibility  as  regards  speed  and  power,  the  internal  combustion 
engine  has  proved  indispensable.  In  large  units  it  serves  the 
steel  mills,  which  put  the  waste  gases  from  their  blast  furnaces 
to  work,  and  in  its  application  to  the  automobile  it  has  effected 
a  revolution  in  transportation  and  travel.  Although  in  the 
manufactures  of  the  United  States  in  1914  the  internal  com- 
bustion engine  still  accounted  for  less  than  5%  of  the  total 
horsepower,  the  aggregate  horsepower  of  the  gasoline  engines 
of  automobiles  has  since  that  time  considerably  exceeded  the 
total  horsepower  from  all  sources  employed  in  manufacturing 
industry. 

QUESTIONS  AND  TOPICS 

1.  Do  not  attempt  to  remember  any  of  the  figures  in  sect.  316,  unless 
possibly  the  first  two  of  the  last  line. 

Prepare  a  graphic  chart  in  the  following  way.  Lay  off  the  time  periods 
on  the  horizontal  line  at  the  bottom  of  your  paper,  and  on  the  perpen- 
dicular, near  the  right-hand  margin,  lay  off  the  figures  of  the  last  line  of 
the  table.  This  will  insure  space  in  the  chart  for  all  the  lines.  Divide 
the  perpendicular  into,  say,  forty  units.  Each  unit  may  then  be  made 


278  A  HISTORY  OF  COMMERCE 

to  represent:  1,000  million  dollars  of  value;  $1  per  capita;  40  million  tons 
of  coal;  2  million  tons  of  iron.  Indicate  the  figures  for  1913  on  the  per- 
pendicular (commerce  40,  per  capita  commerce  24,  coal  36,  iron  39); 
and  perform  the  same  operation  for  the  figures  on  perpendiculars  above 
each  of  the  other  dates.  Use  for  each  item  a  characteristic  mark,  (cross, 
circle,  triangle,  square),  which  will  enable  you  to  distinguish  it  from  the 
others.  Then  unite  the  marks  of  each  kind  by  a  curved  or  crooked  line. 
Choose  a  characteristic  form  of  line  (dotted,  wavy,  or  colored)  for  each 
item.  If  the  chart  be  made  on  a  large  scale  and  with  sufficient  neatness, 
later  tables  of  statistics  (development  of  railroads,  trade  of  particular 
countries,  etc.),  can  be  entered  upon  it. 

With  regard  to  each  one  of  the  items:  when  was  the  increase  (measured 
by  the  slope  of  the  line)  greatest?  When  least?  What  relation  is  apparent 
in  the  increase  of  different  items?  Many  of  the  questions  suggested  by  a 
study  of  the  figures  will  be  treated  in  later  sections. 

2.  Prepare  a  small  chart  of  the  figures,  giving  the  estimated  value 
of  commerce  1700-1899;    note  the  enormous  gains  made  in  the  nine- 
teenth century. 

3.  Development  of  printing,  especially  of  periodical  publications,  in 
recent  years.    [Encyc.,  preferably  the  new  International  or  Supplement 
to  the  Britannica,  under  Printing,  Newspaper,  etc.    Cf .  Scribner's  Maga- 
zine, 1897,  vol.  22,  p.  447  ff.,  on  the  modern  newspaper  business;   Taylor 
in  Depew,  One  hundred  years,  chap.  25,  Williams  in  same,  chap.  26.] 

4.  Divide  the  perpendicular  on  the  right-hand  side  of  your  chart  into 
spaces,  indicating  the  shares  of  the  chief  countries  in  commerce. 

5.  Make  out  a  list  of  three  changes  coming  under  each  one  of  the  three 
heads    discussed.      Example:     technical    progress,    wireless    telegraphy; 
business  organization,  trusts;    political,  international  arbitration,  rec- 
iprocity. 

6.  Early  history  of  the  coal  trade.    [R.  L.  Galloway,  The  rise  of  the 
coal  trade,  Contemporary  Review,  1892,  62:  569-578.] 

7.  Industrial  and  commercial  importance  of  coal.     [Edward  Atkin- 
son, Coal  is  king,  Century  Magazine,  1897-98,  55:  828-830.] 

8.  Effect  of  a  stoppage  of  the  coal  supply.     [Stephen  Jeans,  The  coal 
crisis  and  the  paralysis  of  British  industry,  Nineteenth  Century,  1893,  34: 
791-801.] 

9.  How  does  the  increase  in  steam  horse-power  compare  with  the  in- 
crease in  the  output  of  coal?    With  the  growth  of  commerce? 

10.  Earliest  history  of  the  steam-engine  (to  about  1700).    [Thurston, 
chap.  1,  sect.  1.] 

11.  Earliest  applications  of  the  steam-engine.     [Thurston,  chap.  1, 
sect.  2.] 

12.  Development  of  the  engine  before  Watt.    [Thurston,  chap.  2.] 


COMMERCE  AND  COAL  279 

13.  Development  by  Watt  and  his  contemporaries.  [Thurston, 
chap.  3.] 

14.  Recent  improvements.     [Thurston,  chap.  6;    lies,  chap.  5.] 

BIBLIOGRAPHY 

Bibliographical  aids  become  broader  in  the  recent  period.  The 
great  literature  scattered  through  periodicals,  in  which  articles  of  lasting 
value  are  often  to  be  found,  is  made  accessible  by  Poole's  Index  and  its 
continuations;  books  in  print,  if  not  too  technical  for  the  general  public, 
will  be  found  in  the  A.  L.  A.  (American  Library  Association)  Catalogue, 
which  supplies  full  titles  and  prices. 

Various  cyclopedias  and  dictionaries  of  commerce  have  been  pub- 
lished in  the  nineteenth  century;  they  are  useful  repositories  of  informa- 
tion, especially  of  statistics.  Among  them  the  following,  in  English,  may 
be  mentioned:  McCulloch,  **  Dictionary,  various  editions;  Waterston, 
Cyclopaedia,  1847;  Macgregor,  *  Commercial  statistics,  1850;  Homans, 
Cyclopaedia,  1858.  Statistics  are  brought  up  to  date  in  various  year- 
books and  periodicals;  the  **  Statesman's  Year-Book  is  an  indispensable 
annual,  and  will  meet  all  ordinary  demands  of  teacher  and  class. 

The  student  of  the  history  of  commerce  is  often  forced  to  turn  to 
narrative  political  histories  for  information.  Among  the  general  his- 
tories of  Europe  in  the  nineteenth  century  may  be  mentioned  Charles 
D.  Hazen,  *  Modern  Europe,  N.  Y.,  Holt,  1920;  C.  M.  Andrews,  *  Modern 
Europe;  N.  Y.,  Putnam,  1899;  Seignobos,  **  Pol.  hist. 

Much  has  been  written,  of  course,  on  the  progress  of  the  century  in 
various  technical  lines.  Ure's  Dictionary,  various  editions,  describes  the 
advances  of  the  first  part  of  the  century;  and  the  student  will  probably 
find  one  of  the  modern  encyclopedias  (Britannica,  with  Supplement;  Inter- 
national) the  most  satisfactory  source  of  information  on  recent  progress. 
No  attempt  can  be  made  in  this  or  the  following  chapters  to  cover  the 
great  field  of  technical  literature.  Jevons'  **  Coal  question  should, 
however,  be  mentioned  as  still  of  great  interest  and  value.  Nicolls, 
*  Story;  Edward  A.  Martin,  *  Story  of  a  piece  of  coal,  N.  Y.,  Appleton 
1896;  or  R.  Meldola,  *  Coal  and  what  we  get  from  it,  N.  Y.,  Young, 
1897  can  be  assigned  for  reading  by  the  class.  Edwin  C.  Eckel,  Coal, 
iron  and  war,  N.  Y.,  Holt,  1920,  is  an  interesting  and  suggestive  study 
in  the  physical  bases  of  national  industry.  On  the  steam-engine,  Robert 
H.  Thurston's  History,  N.  Y.,  Appleton,  1902  will  probably  be  found 
most  useful.  The  biographies  by  Samuel  Smiles  are  a  valuable  history  of 
technical  progress,  interesting  and  trustworthy.  Of  more  recent  books, 
designed  for  popular  reading,  George  lies,  Flame,  electricity  and  the 
camera,  N.  Y.,  Doubleday,  1900  contains  attractive  accounts  of  many 
features  of  technical  progress. 


CHAPTER  XXIX 
MACHINERY  AND  MANUFACTURES 

327.  Development  of  agriculture.  —  Pursuing  now  our  sur- 
vey of  the  technical  advances  of  the  century,  we  must  notice 
first  the  oldest  and  perhaps  the  most  important  branch  of 
production,  agriculture.     An  American  reader  does  not  need 
to  be  told  that  farm  work  has  been  greatly  changed  by  the 
introduction  of  improved  tools  and  machinery.     Even  an  im- 
plement so  old  and  apparently  so  simple  as  the  plow  will  do 
now  better  work  with  half  the  force  formerly  required.     Culti- 
vating and  harvesting  machines  of  various  kinds  spare  land 
and  labor.     The  introduction  of  artificial  fertilizers  has  given 
new  freedom  and  efficiency  to  the  agriculturist. 

328.  Progress  less  in  agriculture  than  in  other  branches  of 
production.  —  Still,  when  allTs  said,  agriculture  is^the  branch 
of  prooTuction"  which  has  been  affected  least  by  the  changes  of 
the  century.     The  farmer  is  still  bound  to  the  soil  and  subject 
to  the  weather.     Steam  power  has  not  made  for  itself  the 
place  which  sanguine  men  once  thought  it  would  win.     In 
Europe  reforms  have  been  effected  in  sweeping  away  anti- 
quated institutions  affecting  the  personal  liberty  and  property 
rights  of  cultivators,  who  now,  in  free  association,  can  work 
far  more  efficiently  than  before.     In    other    continents    the 
extension  of  the  modern  transportation  system  has  effected  a 
revolution  in  the  choice  of  crops  and  the  means  of  marketing 
them.     Neither  transportation,  steam  power,  nor  machinery, 
however,  has  vitally  affected  the  methods  by  which  crops  are 
grown;  and  when  the  first  fertility  of  new  land  has  been  ex- 
hausted and  a  growing  population  clamors  for  a  cheap  food 

280 


MACHINERY  AND  MANUFACTURES  281 

supply,  the  world  will  find  that  one  of  its  great  problems  is 
still  unsolved. 

329.  Function    of    machinery.  —  For    the    great    changes 
effected  by  the  use  of  steam  we  look,  of  course,  not  to  agricul- 
ture but  to  manufactures  and  transportation.     These  changes 
have  been  wrought  through  the  medium  of  machinery,  and 
the  reader  is  asked  to  give  particular  attention  now  to  the 
part  which  machinery  plays  in  modern  life.     I  spoke  above  of 
coal  as  offering  power  to  men.     How  can  you  apply  this  power 
to  a  useful  purpose?    First,  you  must  burn  the  coal  under  a 
boiler  to  produce  steam;  second,  you  must  translate  the  ex- 
pansive power  of  steam  into  regular  forceful  motion  in  an 
engine;  finally,  you  must  apply  the  force  and  the  motion  in 
just  the  way  that  is  wanted  by  means  of  a  machine.     Evidently 
machinery  does   not   depend   altogether  upon  steam.     Rude 
machines,  mills  for  grinding  grain,  for  example,  were  run  by 
wind  or  water  power  long  before  the  steam-engine  was  invented ; 
water  power  is  being  transmitted  by  electricity  in  increasing 
quantities  at  present;  and  men  hope  that  we  shall  be  able  to 
use  the  heat  of  the  sun  or  the  force  of  the  tides  to  run  machinery 
in  the  future. 

330.  Advantages  of  machines.  —  Practically,  however^  the 
great  extension  in  the  use  of  machinery  has  depended  on  the 
power  obtained  from  coal  through  steam.     Only  in  the  period 
since  the  adoption  of  improved  forms  of  steam-engine  have 
we  realized  the  possibilities  of  machines.     They  can  be  applied 
only  to  certain  classes  of  work,  especially  that  involving  the 
constant  repetition  of  an  operation  which  can  be  easily  regu- 
lated either  by  the  machine  itself  or  by  a  laborer  supervising  it. 
We  can  use  machines,  for  instance,  to  make  cloth  and  even 
to  make  clothes,  but  we  do  not  use  them  in  the  operations  of 
dressing  and  undressing.     In  their  proper  field,  however,  they 
are  indispensable.     They  will  accomplish  tasks  which  are  too 
great  or  too  small  for  human  hands.     They  repeat  a  process 
or  copy  a  model  with  absolute  fidelity.     They  never  grow 
tired  and  they  have  no  human  failings;  they  often  economize 


282  A  HISTORY  OF  COMMERCE 

time  and  materials.  Finally,  and  this  is  the  point  of  decisive 
importance,  inmany  lines  of  work  they  furnish. ihe__product  at 
a  cost  far  below  that  of  hand  labor. 

331.  Revolution  in  old  industries  effected  by  machinery.  — 
To  describe  the  manifold  applications  of  machinery  in  the 
nineteenth  century,  within  the  limits  of  this  manual,  is  impos- 
sible.    Let  the  reader  glance  from  the  book  to  the  objects 
surrounding  him,  and  make  a  list  of  the  ten  objects  which 
first  attract  his  attention.     If  he  will  trace  their  history  he 
will  find,  in  all  probability,  that  they  are  all  the  products  of 
complicated  machinery,  which  has  been  developed  from  the 
simplest  beginnings  in  the  course  of  the  century.     He  will 
probably   experience   difficulty   in   finding   a    familiar   object 
which  has  not  been  subjected  to  machine  processes  unknown  in 
1800.     Machinery  has  heightened  human  productivity  in  cer- 
tain lines  a  hundred  or  even  a  thousand  fold.     At  the  Atlanta 
€otton  Exposition  of  1881,  two  carders,  two  spinners,  and  one 
weaver,  from  the  mountain  region  of  Georgia,  could  produce 
«ight  yards  of  coarse  cotton  cloth  in  a  day  of  ten  hours.     The 
same  number  of  persons  in  a  modern  cotton  factory  could 
produce  800   yards   by   machinery.     The   cotton  goods   pro- 
duced for  home  consumption  in  the  United  States  by  160,000 
laborers  at  that  time,  would  have  required  the  services  of 
16,000,000    laborers    without    machinery.     Again,    a    skilful 
woman  can  knit  80  stitches  a  minute  by  hand;  a  machine 
enables  her  to  make  480,000. 

332.  Introduction  of  new  industries.  —  Machinery  has  not 
only  revolutionized  old  industries;  it  has  created  many  new 
ones.     A    distinguished    American    economist    expressed    the 
opinion,  about   1890,  that  half  of  all  those  who  were  then 
earning  their  living  by  industrial  pursuits  did  so  in  occupa- 
tions that  not  only  had  no  existence,  but  which  had  not  even 
been  conceived  of,  a  hundred  years  before.     I  may  write  with 
a  steel  pen,  with  a  fountain  pen,  or  with  a  typewriter;  which- 
ever choice  I  make  I  am  giving  employment  to  a  group  of 
mechanical  laborers  who  did  not  exist   in   1800.     Taking  a 


MACHINERY  AND  MANUFACTURES  283 

particular  city  as  an  example,  the  industrial  specialities  of 
Leipzig  are  said  to  have  increased  from  118  in  1751  to  557  in 
1890,  a  growth  of  372  per  cent.  Nor  must  we  limit  our  view 
of  the  effects  of  machinery  to  the  mechanical  pursuits  which 
are  carried  on  about  us.  Increased  efficiency  due  to  the  use 
of  machinery  has  set  men  free  from  other  pursuits  to  engage 
in  commerce,  education,  domestic  service,  etc. 

333.  Importance  of  iron  in  the  age  of  machinery.  —  One 
particular   industry   deserves   special    consideration   here,    by 
reason  of  the  quality  of  its  product  rather  than  of  the  quantity 
of  laborers  employed  or  the  mere  exchange  value  of  the  output. 
Without  iron  the  modern  age  of  machinery  would  be,  at  best, 
of  stunted  growth.     Jevons  characterized  admirably  the  mod- 
ern industrial  system  when  he  said  that  steam  is  its  motive 
power  and  iron  is  the  fulcrum  and  the  lever.     It  is  safe,  I 
think,  to  challenge  the  ordinary  reader  of  the  present  day  to 
name  a  machine  which  is  not   composed  largely  or  almost 
wholly  of  iron.     The  whole  structure  of  our  modern  industry 
depends  on  tjie  means  of  getting  cheap  iron.     "Without  it 
the  engine,  the  spinning-jenny,  the  power-loom,  the  gas-  and 
water-pipe,  the  iron  vessel,  the  bridge,  the  railway  —  in  fact, 
each  one  of  our  most  important  works  —  would  be  imprac- 
ticable from  the  want  and  cost  of  material." 

334.  Scarcity  of  iron  before  the  nineteenth  century.  —  Re- 
turning to  the  period  about  1800  we  find  ourselves  in  a  different 
world.     I  have  described  in  a  previous  chapter  the  improve- 
ments effected  in  the  manufacture  of  iron  in  the  eighteenth 
century.     Great  as  was  the  promise  of  these  improvements,  it 
waited  long  for  full  realization;  well  into  the  nineteenth  cen- 
tury iron  remained  relatively  scarce  and  dear  and  was  spared 
in  every  possible  way.     A  youth  destined  to  play  a  leading 
part  in  the  iron  age  (Joseph  Nasmvth')   visited  the  Carron 
Iron  Works  in  1823,  and  here  is  the  description  which  he  gives 
of  a  celebrated  foundry  and  machine  shop,  associated  with  the 
construction    of    the    first    working    steam-engine    by    Watt. 
"  Much  of  the  machinery  continued  to  be  of  wood.     Although 


284  A   HISTORY  OF  COMMERCE 

effective  in  a  general  way  it  was  monstrously  cumbrous.  It 
gave  the  idea  of  vast  power  and  capability  of  resistance,  while 
it  was  far  from  being  so  in  reality."  If  this  was  the  condition 
at  the  Carron  Iron  Works,  what  must  it  have  been  in  ordinary 
factories? 

335.  Development  of  machine  tools  for  working  iron.  - 
Iron  was  little  used,  partly  because  it  was  hard  to  get  and 
partly  because  it  was  hard  to  work.  There  were  in  England 
about  1800  only  three  good  machine  shops,  where  small  steam- 
engines  were  built.  The  equipment  of  even  the  best  machine 
shop  would  seem  now  wretchedly  inadequate,  and  Stephenson 
was  greatly  hampered,  in  building  his  first  locomotive,  by  the 
lack  of  good  machine  tools,  for  working  metals.  William 
Fairbairn  said  in  his  presidential  address  before  the  British 
Association  at  Manchester,  "When  I  first  entered  this  city 
[about  1813]  the  whole  of  the  machinery  was  executed  by 
hand.  There  were  neither  planing,  slotting,  nor  shaping 
machines;  and,  with  the  exception  of  very  imperfect  lathes, 
and  a  few  drills,  the  preparatory  operations  of  construction 
were  effected  entirely  by  the  hands  of  the  workmen."  About 
1825  to  1830,  however,  with  the  growth  in  demand  for  iron- 
working  apparatus,  there  began  a  rapid  development  of  this 
branch  of  manufacture,  one  step  in  advance  leading  rapidly  to 
another.  We  may  trace  the  process  in  the  description  that 
Nasmyth  gives  us  of  his  first  machine  shop,  a  shed  measuring 
24  by  16  feet.  "I  removed  thither  my  father's  foot-lathe,  to 
which  I  had  previously  added  an  excellent  slide-rest  of  my 
own  making.  I  also  added  a  'slow  motion/  which  enabled 
me  to  turn  cast-iron  and  cast-steel  portions  of  my  great 
Mandsley  lathe.  I  soon  had  the  latter  complete  and  in  action. 
Its  first  child  was  a  planing  machine  capable  of  executing 
surfaces  in  the  most  perfect  style;  it  was  3  feet  long  by  1  foot 
8  inches  wide.  Armed  with  these  two  most  important  and 
generally  useful  tools,  and  by  some  special  additions,  such  as 
boring  machines  and  drilling  machines,  I  soon  had  a  progeny 
of  legitimate  descendants  crowded  about  my  little  workshop, 


MACHINERY  AND  MANUFACTURES  285 

so  that  I  often  did  not  know  which  way  to  turn."  Nasmyth 
himself  made  one  specially  important  contribution  to  iron- 
working  machinery,  by  the  invention  of  the  steam  hammer  in 
1839;  the  old  "  bit  by  bit "  system  of  welding  became  henceforth 
unnecessary. 

336.  Steel,  character  and  utility.  —  While  the  limits  of  our 
space  will  not  permit  us  to  trace  further  the  development  of 
machine  tools,  which  have  been  made  marvelously  efficient  in 
recent  years,  and  while  we  must  also  forego  a  study  of  the 
details   of   iron   production,   the  topic   of  steel   manufacture 
certainly  deserves   some   consideration.     Ordinary   cast   iron, 
while  strong  and  hard  enough  for  many  purposes,  still  is  brittle 
by  reason  of  the  large  proportion  of  carbon  and  other  impurities 
which  it  contains.     These  impurities  may  be  burned  out  in 
the  puddling  process,  and  the  nearly  pure  iron  thus  obtained, 
called  malleable  or  wrought  iron,  has  a  toughness  enabling  it 
to  resist  far  greater  strains  than  cast  iron  can  stand.     Inter- 
mediate between  the  two  irons,  and  containing  one  per  cent  of 
carbon,  more  or  less,  is  still  another  product,  steel,  which  may 
be  made  even  more  tenacious  than  wrought  iron,  or  even 
harder  than  cast  iron.     Its  peculiar  property  of  "taking  a 
temper"  is  probably  known  to  most  readers.     The  valuable 
properties  of  steel  have  been  known  and  prized  for  ages,  but 
till  well  into  the  nineteenth  century  it  could  be  used  only 
sparingly;   it  was  commonly  manufactured  by  first   making 
wrought  iron,  by  the  tedious  process  of  puddling,  and  then 
heating  the  iron  bars  in  contact  with  charcoal  until  they  had 
absorbed  the  proper  amount  of  carbon.     The  expense  of  this 
process  prohibited  the  use  of  steel  for  most  purposes;  the 
wrought  iron  cost  $75  a  ton  and  the  finished  steel  $250  or 
more;  and  the  output  would  seem  to-day  inconsiderable. 

337.  Recent  improvements  in  the  manufacture   of  steel; 
the  Bessemer  process/—  Many  men  have  contributed  to  bring 
the  manufacture  oT'steel  to  its  present  efficiency,  and  we  may 
notice  only  the  names  associated  with  the  greatest  improve- 
ments.    An  Englishman,  Bessemer,  patented  in  1855  the  idea, 


286  A   HISTORY  OF  COMMERCE 

as  simple  as  it  is  ingenious,  of  turning  cast  iron  directly  into 
steel  by  blowing  air  through  it  when  melted,  and  so  consuming 
the  excess  of  carbon.  It  has  not  proved  possible  to  make  good 
steel  according  to  Bessemer's  original  idea,  but  with  a  slight 
modification  his  process  has  been  wonderfully  successful;  in 
present  practice  all  the  carbon  is  burned  out  by  the  air  current, 
and  then  the  requisite  amount  is  added  before  the  metal  is 
poured  out.  Ore  containing  a  large  amount  of  phosphorus  is 
treated  by  melting  it  in  a  converter  lined  with  lime,  which 
removes  this  dangerous  impurity  ("basic  process"). 

338.  .The    open-hearth     (Siemens-Martin)    process.  —  Still 
another  contribution  to  modern  methods  of  steel  manufacture, 
known  as  the  "open-hearth,"  or,  from  the  names  of  its  intro- 
ducers, the  Siemens-Martin  process,  has  been  of  great  impor- 
tance since  about  1870.     The  steel  is  made  from  ore  or  from 
a  combination  of  different  kinds  of  iron,  and,  by  peculiar 
devices  for  economizing  the  heat  of  the  furnace,  the  process 
may  be  continued  so  long  and  regulated  so  carefully  that  a 
product  of  high  quality  may  be  turned  out  at  a  moderate  cost. 
The  result  of  all  these  processes  has  been  to  change  steel  from 
a  luxury  to  a  necessity  of  modern  life.     Modern  mild  steel  is 
40  per  cent  stronger  than  iron,  and  is  tough  enough  to  be 
tied  in  a  knot  or  punched  in  the  shape  of  a  bowl  when  cold. 
The  increase  in  efficiency  due  to  its  substitution  for  iron  in 
machinery,   railroads,   ships,   and    structural    work   is  simply 
incalculable. 

339.  Development  of  the  modern  chemical  industry.  —  In 
detailing  at  such  length  as  I  have  done  the  exploits  of  machinists 
in  the  past  century,  I  may  tempt  the  reader  to  undervalue  the 
contributions  of  scientists.     To  guard  against  that  error  let 
us  consider  briefly  the  development  of  the  chemical  industry, 
which,  like  the  iron  industry,  renders  a  service  to  modern 
civilization  beyond  any  measure  of  dollars  and  cents.     The 
Frenchman,  Lavoisier,  had  established  chemistry  on  a  scientific 
basis  before  1800,  but  industrial  chemistry  used  still  the  primi- 
tive methods   which   had   been  employed  for  ages.     Let  us 


MACHINERY  AND  MANUFACTURES  287 

take,  for  instance,  the  single  substance,  carbonate  of  soda,  of 
prime  importance  in  industrial  chemistry,  for  on  it  depend 
the  various  industries  of  glass,  pottery,  soap,  photography, 
paper,  etc.  This  substance  was  still  obtained  in  the  eight- 
eenth century,  by  burning  seaweed  and  seashore  plants  and 
treating  their  ashes;  Spain  had  a  considerable  export  of  barilla, 
and  owed  to  this  product  whatever  success  she  attained  in  the 
soap  manufacture.  Leblanc  emancipated  the  soda  industry 
from  kelp  and  barilla,  by  introducing  the  process  based  on 
sulphuric  acid  and  salt;  step  by  step  improvements  have  been 
made  since  then.  Sulphuric  acid,  discarded  in  the  soda  in- 
dustry, has  grown  in  importance  notwithstanding;  it  is  the 
controlling  element  in  the  manufacture  of  other  acids,  commer- 
cial fertilizers,  alum,  ether,  glucose,  etc.,  and  in  oil  refining; 
and  it  is  produced  at  a  price  and  of  a  quality  formerly  unknown. 
The  discovery  of  the  anilin  colors,  in  1859,  has  revolutionized 
the  art  of  dyeing.  The  chemist  will  make  you,  from  coal  tar, 
almost  any  color  or  shade  desired.  He  will  make  you  perfumes 
or  flavors;  and,  if  he  has  failed  to  construct  quinine  artificially, 
he  has  at  least  learned,  in  his  attempts,  to  make  substances 
such  as  antipyrin  and  phenacetin,  of  equal  value  for  other 
purposes. 

340.  Influences  determining  the  local  distribution  of  manu- 
factures. —  A  review  of  the  contents  of  this  chapter,  with  its 
discussion  of  the  factors  which  have  built  up  modern  industry, 
should  suggest  to  the  reader  the  countries  which  have  enjoyed 
exceptional  advantages  in  the  modern  manufacturing  period. 
Resources  of  coal  and  iron,  clearly,  are  of  great  importance. 
That  they  are  not  decisive,  however,  is  proved  by  the  absence 
of  modern  manufactures  in  China,  where  there  are  abundant 
supplies  of  coal  and  iron,  and  their  presence  in  districts  like 
the  North  of  Ireland,  where,  for  instance,  a  great  ship-building 
industry  is  fed  with  imported  iron  and  coal.  Factories  can 
exist  at  a  considerable  distance  from  their  source  of  supply  if 
they  are  served  by  a  transportation  system  which  will  fetch 
raw  materials  and  carry  finished  products  cheaply;  efficient 


288  A  HISTORY  OF  COMMERCE 

transportation  is  essential.  Many  other  elements  might  be 
suggested  as  going  to  form  the  basis  of  national  success  in 
manufactures,  but  of  them  all  I  desire  here  to  emphasize  only 
two:  good  government  and  intelligent  men.  Manufactures 
cannot  thrive  in  a  country  where  unwise  or  corrupt  methods 
of  taxation  rob  the  investor  of  his  gains.  Nor  can  they  prosper, 
whatever  other  advantages  a  country  may  have,  if  it  lacks 
intelligent  and  steady  laborers,  or  clear-sighted  and  energetic 
leaders.  The  reader  will  have  an  opportunity,  in  later  chapters, 
to  test  the  truth  of  these  statements;  meanwhile,  in  anticipa- 
tion, attention  may  be  directed  to  the  United  States,  England, 
and  Germany,  as  those  countries  which  have  most  signally 
proved  their  fitness  for  manufacturing. 


QUESTIONS  AND  TOPICS 

1.  Development  of  the  science  and  art  of  agriculture  in  the  nineteenth 
century.     [Encyclopedia.] 

2.  Artificial  fertilizers.    [Peacock,  in  Cosmopolitan  Magazine,  Nov., 
1895.] 

3.  A  modern  wheat  farm.     [Scribner's  Magazine,  1897,  vol.  22,  p. 
531  ff.;  Edgar,    Story  of  a  grain  of  wheat.     Note  that  "bonanza"  farms 
are  not  typical  of  modern  agriculture  in  general.] 

4.  What  use  is  coal  without  a  steam-engine?     What  use  is  machinery 
without  a  steam-engine?      What  use  is  a  steam-engine  without  coal  or 
machinery?      Which  would  the  world  give  up  most  readily,  coal,  steam- 
engine,  or  machinery  ? 

5.  Character  and  advantages   of  machinery.     [Hobson,  Mod.   cap., 
chap.  3,  sects.  1-3.] 

6.  How  much  have  women  gained  by  being  relieved  of  the  necessity 
of  making  cloth  for  family  use?    [Read  description  of  the  labor  of  spin- 
ning, weaving,  etc.,  in  colonial  times;  see  Alice  M.  Earle,  Colonial  dames 
and  goodwives,  Boston,  1895,  or   Syndey  G.  Fisher,  Men,    women  and 
manners  in  colonial  times.  Philadelphia,  1898.] 

7.  Effect  of  the  introduction  of  machinery  on  the  demand  for  labor 
in  different  occupations.     [Hobson,  Mod.  cap.,  chap.  8.] 

8.  The  growth  of  factories.     [Bourne,  Romance,  chap.  9.] 

9.  Organization  of  a  modern  factory.     [P.  G.  Hubert,  The  business  of 
a  factory,  Scribner's  Magazine,  1897,  vol.  21,  p.  306  ff;  Fred  J.  Miller, 
The  machinist,  same,  1893,  vol.  14,  p.  314  ff .] 


MACHINERY  AND  MANUFACTURES  289 

10.  Progress  in  the  iron  manufacture.    [lies,  chap.  4;  R.  R.-  Bowker, 
A  bar  of  iron,  Harper's  Magazine,  1893-4,  88:   408-424,  F.  W.  Taussig, 
The  iron  industry  in  the  U.  S.,  Quarterly  Journal  of  Economics.  Feb.,  1900, 
reprinted  in  Bullock's  Selected  Readings  in  Economics.] 

11.  Development  of  machine  tools  for  iron  working.     [Sellers,  in 
Depew,  One  hund.  years,  chap.  49.3 

12.  Progress  in  the  steel  manufacture.    [R.  R.  Bowker,  A  steel  tool, 
Harper's  Magazine,  1893-4,  88:  587-602;    Waldon  Fawcett,  The  center 
of  the  world  of  steel,  Century  Magazine,  1901,  62:   189-203.] 

•  13.  Write  a  biographical  sketch  of  one  of  the  following:  Bessemer, 
Siemens,  Whitworth,  Brown,  Thomas,  Snelus.  [W.  T.  Jeans,  The  creators 
of  the  age  of  steel,  N.  Y.,  1884.] 

14.  Write  a  report  on  advances  in  the  manufacture  of  one  of  the 
articles  named.     [Encyclopedias;    on  coal  tar  products  see  Meldola.] 

15.  What  conditions  have  led  to  the  rise  of  the  characteristic  manu- 
factures of  your  own  vicinity?    In  what  regions  are  their  chief  competitors? 
What  are  the  relative  advantages  of  different  places  with  respect  to  some 
particular  manufacture? 

BIBLIOGRAPHY 

See  the  previous  chapter  for  books  of  general  reference.  The  modern 
manufacturing  organization  and  the  influence  of  machinery  have  been 
treated,  from  the  economic  standpoint,  by  Hobson,  Modern  capitalism, 
and  Schulze-Gaevernitz,  The  cotton  trade,  Manchester,  1895.  A  history 
and  analysis  of  the  factory  system  by  C.  D.  Wright  was  published  in  the 
Tenth  U.  S.  Census,  1880,  vol.  2;  further  references  to  U.  S.  public  docu- 
ments will  be  given  below,  in  the  chapters  on  the  United  States.  The 
English  parliamentary  papers  and  accounts  contain  an  immense  amount 
of  material  on  this  subject;  the  last  volume  of  Cunningham,  Growth,  has 
useful  references  to  them.  The  technical  history  of  manufacturers  defies 
compression.  Much  interesting  material  may  be  found  in  the  reports 
of  the  U.  S.  Commissioners  to  various  world  expositions. 

A  good  account  of  the  history  of  machine  making  is  provided  by 
Joseph  W.  Roe,  **  English  and  American  tool  builders,  New  Haven. 
Yale  Univer.  Press,  1916. 


CHAPTER  XXX 
ROADS  AND  RAILROADS 

341.  Commercial  importance  of  the  subjects  of  the  chapter. 

—  "  Of  all  inventions,  the  alphabet  and  the  printing-press 
alone  excepted,  those  inventions  which  abridge  distance  have 
done  most  for  the  civilization  of  our  species."  Macaulay's 
celebrated  sentence  applies  to  civilization  in  general.  With 
regard  to  the  material  civilization  depending  upon  commerce, 
certainly  no  factor  has  been  of  greater  importance  than  im- 
provement in  the  means  of  transportation  and  communication. 
An  improvement  in  these  means  has  been  effected  during  the 
past  century,  without  a  parallel  in  the  world's  history;  and  a  de- 
scription of  the  changes  deserves  the  most  careful  attention  of 
the  student  in  the  short  space  which  can  be  allowed  the  subject. 

342.  Statistical  survey  of  development.  —  For  a  convenient 
means  of  reference  I  introduce,  in  this  place,  a  statistical  table 
(on  opposite  page)  showing  the  development  of  the  most  im- 
portant modern  instruments  of  transportation  and  communica- 
tion. 

343.  Jmprovement  in  the  condition  of  roads.  —  Aside  from 
the  stretches  of  canal  which  had  been  brought  into  operation,  the 
universal    means   of   inland   transportation   about    1800    was 
the  road.     Some  reference  has  been  made  in  an  earlier  chapter 
to  the  condition  of  English  highways  in  the  eighteenth  century, 
and  to  the  improvements  which  marked  that  period.     Condi- 
tions on  the  Continent  were  worse  than  those  in  England. 
French  roads  were  mere  tracks  in  the  first  part  of  the  eighteenth 
century,  and  for  the  most  part  were  still  hopelessly  bad  at  its 
close,  when  the  system  of  maintaining  the  roads  by  forced 
labor  was  abolished. 

290 


ROADS  AND  RAILROADS 


291 


From  near  the  close  of  the  eighteenth  century,  however, 
we  may  date  the  beginning  of  a  period  of  rapid  improvement 
in  the  roads  of  western  Europe.  The  turnpike  system,  which 
allowed  tolls  to  be  charged  for  the  use  of  improved  highways, 
encouraged  the  investment  of  capital  in  these  undertakings. 
The  teachings  of  Telford  and  Macadam,  two  great  road-engi- 
neers who  emphasized  the  necessity  of  using  good  materials 
and  securing  proper  drainage,  were  generally  applied.  In  the 
period  from  1800  to  1850  the  roads  of  Europe  were  reformed 


- 

SHIPPING 
MILLION  TONS 

RAILWAYS 
TELEGRAPHS  CABLES 

Sail 

Steam 

Carrying 
Power 

Thousand  Miles 

1800..".... 
1820     

4.0 
5.8 
7.1 
9.0 
11.4 
14.8 
12.9 
14.4 
9.1 
6.6 
4.6 
3.8 

.02 
.1 
.3 
.8 
1.7 
3.0 
5.8 
8.2 
13.8 
22.0 
26.5 

4.0 
5.8 
7.5 
10.4 
14.9 
21.7 
25.1 
37.9 
42.3 
62.1 
92.8 
109.9 

1830 

.2 
5.4 
23.9 
67.3 
139.8 
224.9 
390.0 
500.0 
637.0 
690.0 

1840    .  .  . 

1850  

5. 
100. 
281. 
440. 
768. 
1,180 
1,307 
1,462 

.02 
1.5 
15. 
49. 
132. 
200. 
291. 
330. 

I860  

1870  

1880  

1890  

1900  

1910  

1913  

to  meet  the  demands  which  commerce  made  upon  them,  before 
the  introduction  of  the  railroad,  and  were  put  in  the  excellent 
condition  which  attracts  the  attention  of  American  travelers 
to-day.  The  cost  of  freight  transportation  was  reduced  to 
half  or  less  of  what  it  had  been,  and  the  speed  of  passenger 
service  increased  correspondingly.  An  Englishman,  Porter, 
notes  that  in  1798  he  occupied  nineteen  hours  in  traveling 
eighty  miles  by  what  was  considered  a  "fast  coach";  when 
he  wrote,  in  1838,  the  trip  was  made  in  eight  hours. 

344.  Importance  of  roads  in  the  present  transportation 


292  A  HISTORY  OF  COMMERCE 

system.  —  A  word  of  warning  may  be  advisable  before  we 
leave  this  subject  to  study  more  recent  means  of  transporta- 
tion. Not  many  years  ago  a  French  economist  estimated  that 
not  one  twentieth  of  the  settlements  of  the  inhabited  world 
were  within  less  than  a  day's  distance  from  a  railroad.  Even 
in  the  most  advanced  countries  the  extent  of  roads  far  exceeds 
that  of  railroads,  and  only  in  the  rarest  cases  do  products 
reach  the  consumer  without  having  traversed  a  stretch  of  com- 
mon road.  The  road,  therefore,  takes  a  place  in  our  modern 
economy  more  important  than,  in  our  carelessness,  we  generally 
admit. 

The  unit  for  measuring  the  expense  of  transportation  is  the 
cost  of  moving  a  ton  one  mile;  on  a  modern  American  railroad 
the  average  cost  of  a  ton-mile  is  less  than  one  cent.  Even  on 
the  excellent  roads  of  Europe  the  cost  is  ten  cents  or  more; 
while  it  has  been  estimated  that  the  average  cost  of  moving 
farm  produce  to  market  over  the  common  roads  of  the  United 
States  is  twenty-five  cents  per  ton-mile.  Assuming  that  the 
average  haul  is  twelve  miles,  and  that  three  hundred  million 
tons  are  carried  in  a  year,  the  expense  reaches  the  total  of 
nine  hundred  million  dollars,  a  sum  greater  than  the  operat- 
ing expenses  of  all  the  railroads  of  the  United  States  before  1900. 

It  has  been  proved  by  actual  test  that  the  same  force  which 
draws  one  ton  on  a  muddy  earth  road  will  draw  four  tons  on 
a  hard  macadam  road.  One  of  the  greatest  improvements  in 
transportation  is  still,  in  large  part,  neglected  by  the  American 
people;  and  intelligent  energy  will  find  in  no  field  richer  results 
than  in  the  reform  of  our  common  roads.  Such  a  reform 
would  economize  time  and  force,  would  reduce  wear  and  tear, 
and  would  greatly  better  the  business  position  of  the  farmer 
by  enabling  him  to  choose  his  own  time  for  marketing  his  goods 
and  making  his  purchases. 

_345.  Advantage  of  transportation  by  water;  canals.  —  The 
student  may,  perhaps,  remember  that  in  the  Middle  "Ages  the 
expense  of  transportation  by  road  led  people  to  choose  rivers 
for  conveying  their  goods,  whenever  this  was  practicable.  It 


ROADS  AND  RAILROADS  293 

has  been  estimated  that  a  horse  which  could  carry  on  its  back 
two  or  three  centner  (a  centner  is  about  110  Ibs.)  could  with 
equal  exertion  drag  twenty  centner  on  a  highway,  or  1,200 
through  dead-water.  This  enormous  gain  in  efficiency,  result- 
ing from  the  avoidance  of  the  slightest  difference  in  level  and 
from  the  reduction  of  force  wasted  in  friction,  suggested  to 
people  in  early  times  the  idea  of  establishing  channels  for 
water  where  none  had  previously  existed,  that  is,  of  building 
canals.  Locks,  for  controlling  the  flow  and  level  of  the  water, 
were  invented  toward  the  end  of  the  Middle  Ages,  and  a  con- 
siderable extent  of  canalg  had  been  constructed  on  the  Continent 
before  the  Bridgewater  canal,  described  above,  was  opened  in 
England.  The  real  era  of  the  canal,  however,  was  in  the 
period  which  may  be  limited  roughly  by  the  dates  1750  and 
1850. 

346.  Development     of    canals,     1750-1850.  —  Immense 
amounts  of  capital  were  invested  in  canals  in  this  period  of 
their   great    importance;   and   the    European   and    American 
systems  of  barge  canals  were  constructed  substantially  on  the 
lines  which  they  have  since  retained.     A  traveler  could  then, 
as  now,  voyage  through  most  parts  of  central  and  eastern 
Europe   without    leaving    a    canal-boat.     Of   a    country   like 
England,  endowed  by  nature  with  advantages  for  water  com- 
munication, it  could  be  said  in  1838  that  no  spot  south  of  the 
county  of  Durham  was  more  than  fifteen  miles  from  the  means 
of  water  conveyance.     Factories  were  established  along  the 
canals,  as  now  along  the  railroads.     Canals  relieved  the  high- 
ways of  a  large  part  of  the  growing  traffic,  carried  many  raw 
materials  which  could  not  have  borne  the  expense  of  transpor- 
tation by  road,  and  enjoyed  even  a   considerable  share  of 
passenger  traffic. 

347.  Relative  decline  in  importance  of  canals.  —  Of  canals 
as  of  roads  it  may  be  said  that  their  days  of  usefulness  are  far 
from  past.     One  class,  indeed,  that  of  the  great  ship  canals, 
has   grown    rapidly    in    importance    in    recent    years.     Many 
economists  believe  that  even  the  barge  canals  should  be  main- 


ROADS  AND  RAILROADS  295 

tained  and  improved.  There  is  still  an  active  canal  traffic  in 
Europe,  especially  in  Germany,  and  in  the  last-named  country 
a  notable  project  for  extending  the  canal  system  is  under 
consideration.  The  future  of  canals  seems  to  depend  largely 
on  the  introduction  of  improved  forms  of  motor  (electricity, 
gasoline). 

The  canal  has  certainly  yielded  the  place  of  first  importance 
in  internal  transportation  to  the  railroad.  Its  great  merit, 
cheapness,  has  declined  in  importance  with  the  reduction  of 
railroad  rates,  while  its  drawbacks  are  felt  more  and  more 
under  the  conditions  of  modern  business.  The  canal  is  not 
only  much  slower  and  more  uncertain  than  the  railroad;  its 
vital  weakness  is  the  fact  that  in  temperate  climates  its  use- 
fulness is  destroyed  during  at  least  a  part  of  the  winter.  Since 
1850  canal  systems  have  grown  slowly,  if  at  all,  and  in  some 
countries  they  have  declined  greatly.  Nearly  half  of  the 
English  canals  are  now  controlled  by  the  railroads;  some  are 
closed  and  out  of  repair,  and  traffic  is  diverted  from  others  by 
heavy  tolls. 

348.  JMginof  the  steam  railroad.  —  Soon  after  1800  the 
American  inventor,  Evans,  asserted  more  than  once  that  he 
could  manage  to  drive  wagons  on  railways  by  steam.  He 
expressed  an  idea  that  was  by  no  means  new,  and  that  was 
then  floating  in  the  minds  of  many  men.  He  said  truly,  how- 
ever, that  one  step  in  a  generation  is  enough,  and  that  the 
monstrous  leap  from  bad  roads  to  steam  railways  could  not 
be  taken  at  once.  Roads  were  improved,  canals  were  extended, 
and  still  there  was  a  demand  for  better  means  of  transportation. 
Rails,  first  of  wood  and  then  of  iron,  had  long  been  laid  to 
enable  horses  to  draw  heavier  loads  at  mines  and  quarries. 
George  Stephenson,  among  others,  conceived  the  idea  of  apply- 
ing steam  as  the  motive  power  on  these  railways,  and  distin- 
guished himself  above  all  predecessors  by  constructing,  in  1814, 
a  locomotive,  Puffing  Billy,  which  proved  capable  of  haul- 
ing coal  over  a  stretch  of  nine  miles,  from  the  mine  to 
tide-water.  Stephenson  improved  his  original  model,  es- 


296  A   HISTORY  OF  COMMERCE 

pecially  by  the  introduction  of  the  steam  blast  to  help  tha 
draft  and  so  increase  the  power  of  the  boiler;  and  in  1825 
secured  the  adoption  of  the  locomotive  on  the  Stockton  and 
Darlington  Railway  in  Yorkshire.  The  call  for  this  improve- 
ment had  now  become  pressing.  The  port  of  Liverpool  and 
the  important  manufacturing  center,  Manchester,  distant  only 
about  thirty  miles,  were  now  connected  by  three  canals,  yet 
these  were  so  crowded  with  traffic  that  it  took  sometimes  a 
month  for  cotton  to  reach  the  factories  from  the  sea.  The 
opening  of  the  Liverpool  and  Manchester  Railway  in  1830, 
with  a  locomotive,  the  Rocket,  which  made  twenty-nine  miles 
an  hour,  may  be  taken  as  the  completion  of  the  period  of 
•experiment,  and  the  beginning  of  the  raikoad  era. 

349.  Early  period  of  the  railroad.  —  Though  steam  loco- 
motion after  1830  was  a  proved  success,  and  though  railroads 
were  rapidly  extended,  and  1,600  miles  had  been  brought  into 
operation  in  1835,  the  men  of  the  time  had  still  much  to  learn 
concerning  their  new  instrument  of  transportation.     Some  men 
expected  from  it  a  speed  of  75  or  100  miles  an  hour,  while  the 
-State  Engineer  of  Virginia  took  it  as  an  admitted  fact  "  that  a 
rate  of  speed  of  more  than  six  miles  an  hour  would  exceed  the 
bounds  set  by  prudence,  though  some  of  the  sanguine  advo- 
cates of  railways  extend  this  limit  to  nine  miles  an  hour."     In 
certain  localities  the  steam  railroad,  from  the  start,  performed 
great  service  in  freight  carriage.     At  the  Pennsylvania  coal 
mines,  for  instance,  it  reduced  the  cost  of  hauling  a  ton  nine 
miles  to  the  river  from  $4.00  to  $.25.     Still  the  cost  in  general 
was  high;  a  charge  of  ten  cents  per  ton-mile  was  authorized  in 
some  early  charters;  and  few  people  believed  that  the  railroad 
could  compete  successfully  with  the  canal  in  the  transportation 
of  ordinary  freight. 

350.  Improvements   in   locomotives.  —  The   technical    im- 
provements which  have  extended  the  usefulness  of  the  railroad 
far  beyond  the  dreams  of  its  earlier  promoters  have  been  com- 
paratively simple.     Mere  increase  in  size  of  locomotives  and 

.cars  has  been  the  greatest  factor  in  increased  efficiency.     The 


ROADS  AND  RAILROADS  297 

engine  which  Peter  Cooper  constructed  for  experiment  on  the 
Baltimore  and  Ohio,  about  1830,  had  a  boiler  the  size  of  a 
flour  barrel,  weighed  less  than  a  ton,  and  was  about  the  size 
of  a  modern  hand-car.  It  was  of  little  practical  use.  The 
development  from  early  engines  of  the  class  of  the  Rocket,  to 
those  of  modern  American  practice,  is  shown  in  the  following 
figures : 


Weight 

Hauling  Power  on  Level 

Early  

5  to  6  tons 

40  tons 

Improved  

25 

1,200 

Modern.  .  .  .•  

50 

2,400 

In  1914  the  average  weight  of  the  simple  locomotive  in 
the  United  States  was  82  tons.  Not  only  does  a  large  locomotive 
put  to  more  economical  use  the  heat  applied;  the  large  train, 
also,  costs  far  less  in  proportion  for  the  services  of  men  employed 
in  running  it. 

351.  Importance  of  steel  in  railroad  construction.  —  To 
many  readers  practical  devices  like  the  air-brake,  further 
reducing  the  cost  and  increasing  the  efficiency  of  operation, 
will  be  familiar.  One  factor  in  improvement,  however,  is  not 
so  apparent,  and  deserves  special  attention  by  reason  of  its 
commanding  importance.  The  railroad  in  its  modern  form 
would  be  impossible  if  Bessemer  and  others  had  not  taught 
the  world  to  make  steel  cheaply.  Iron  rails,  even  under  com- 
paratively light  loads,  wore  out  and  had  to  be  replaced  con- 
stantly. Steel  rails,  introduced  gradually  after  1860,  could 
bear  double  the  load  on  each  wheel,  and  still  outlive  many 
iron  rails.  The  modern  rail,  simple  as  it  appears,  is  both  in 
material  and  in  proportions  a  great  feat  of  engineering,  "a 
beam  whose  every  dimension  and  curve  and  angle  are  exactly 
suited  to  the  tremendous  work  it  has  to  do."  Steel  rails  and 
steel  bridges  have  made  possible  the  economy  of  the  colossal 
locomotives  of  modern  times.  Steel  has  enabled  men,  instead 
of  building  10-ton  cars  to  carry  10  tons  of  cargo,  to  build 


298 


A   HISTORY  OF  COMMERCE 


12-ton  cars  to  carry  20,  or  14-ton  to  carry  30;  each  improve- 
ment of  this  kind  represents  a  saving  in  the  dead  weight  of 
the  train,  and  a  consequent  reduction  in  cost.  Steel  has 
furnished  a  material  for  the  bridges  over  which  the  cars  are 
carried,  enabling  a  span  of  500  feet  to  be  constructed  as  readily 
as  a  span  of  250  feet,  with  the  iron  formerly  employed. 


GROWTH 

OF  THE 

EUROPEAN 
KAIX.ROADS 


BORHAY  ENS.  CO. 


The  size  of  the  small  circles  indicates  the  railroad  mileage  of  each  country  at  ten 
year  intervals.  To  facilitate  comparison,  the  circles  for  1850  are  printed  black, 
and  those  for  1890  are  shaded.  Note  the  disproportion  of  mileage  and  area. 

352.  Development  of  the  railroad  system  after  1850.  — 
Improvements  in  the  construction,  the  equipment,  and  the 
operation  of  railroads,  for  the  mere  suggestion  of  which  there 


ROADS  AND  RAILROADS  299 

is  scarcely  space  here,  explain  the  rapid  growth  of  the  railroad 
system  shown  in  the  figures  at  the  opening  of  the  chapter. 
It  will  be  noted  that  over  99  per  cent  of  mileage  has  been 
constructed  since  1840,  and  that  even  in  1850  the  world  had 
made  but  a  mere  beginning  in  railroad  construction.  About 
the  middle  of  the  century  began  a  movement  toward  the 
consolidation  of  existing  lines,  which  had  formerly  been  operated 
in  short  stretches  by  independent  companies.  The  student 
should  note  that  this  consolidation  proceeded  largely  along 
the  length  of  railroads,  not  in  the  modern  fashion  by  the  union 
of  parallel  and  competing  lines;  and  it  is  almost  impossible  to 
exaggerate  the  benefits  that  resulted,  in  increased  efficiency  of 
management,  improved  service,  and  lower  rates.  About  this 
time  (1854)  the  first  railroad  was  built  across  the  Alps;  the 
Union  and  Central  Pacific  route  was  opened  in  1869,  beginning 
the  era  of  the  transcontinental  roads;  and  investors  and  engi- 
neers, who  found  the  older  and  more  advanced  sections  ade- 
quately supplied  with  railroads,  began  now  to  build  lines  fa* 
out  into  new  territory,  to  open  up  fresh  land  and  develop  new 
trade. 

353.  Importance  of  railroads  at  present.  —  Some  attention 
will  be  paid  hereafter  to  the  decisive  influence  which  the 
railroad  has  exercised  on  recent  commercial  development;  and 
in  the  history  of  commerce  in  particular  countries  the  thought- 
ful student  will  not  fail  to  recognize  this  influence  even  when 
it  is  not  specifically  pointed  out.  In  leaving  the  subject  at 
this  point,  however,  the  student  may  be  grateful  for  a  sum- 
mary estimate  of  the  relative  importance  of  railroads  and 
other  instruments  of  production  in  our  modern  life.  A  good 
authority  has  estimated  that  one  quarter  or  even  one  third  of 
the  total  invested  capital  of  civilized  nations  has  taken  the 
form  of  railroads.  It  is  doubtful  whether  the  manufacturing 
establishments  of  the  world  are  equal  in  value  to  its  railroads; 
while  the  world's  whole  stock  of  money  would  buy  but  a 
fraction  of  them.  The  railroads  of  the  United  States  carried  in 
1900  a  thousand  million  tons  of  freight  at  a  cost  of  a  thousand 


300  A   HISTORY  OF  COMMERCE 

million  dollars,  and  at  the  rate  of  less  than  three  quarters  of 
a  cent  per  ton-mile.  The  student  may,  from  these  figures, 
estimate  the  service  of  railroads  to  the  average  individual  in 
the  country,  and  may  rest  assured  that  the  work  they  do 
could  not  be  accomplished  by  the  means  in  use  a  century  ago, 
even  if  the  whole  annual  product  of  the  country  were  squan- 
dered in  the  attempt  to  carry  it  on. 

QUESTIONS  AND  TOPICS 

1.  See  the  suggestion  on  the  treatment  of  the  statistics  in  sect.  315. 
Combine  the  statistics  of  the  sections  315  and  342  in  one  chart,  if  practi- 
cable.    See  below,  sect.  354,  for  the  explanation  of  carrying  power;  a 
steamer  is  estimated  to  have  four  times  the  efficiency  of  a  sailing  vessel, 
in  this  table. 

2.  What  is  the  cost  of  transportation  over  roads  in  your  vicinity? 
What  system  of  construction  and  maintenance  is  pursued? 

3.  Write  an  essay  on  one  of  the  following  topics,  from  the  circulars  of 
the  Office  of  Road  Inquiry,  U.  S.  Department  of  Agriculture.     (Copies 
may  probably  be  secured  gratis  on  application.) 

(a)  The  proper  method  of  constructing  and  repairing  earth  roads- 
[Circular  no.  8.] 

(6)  Methods  of  constructing  macadamized  roads.     [No.  21.] 

(c)  Repair  of  macadamized  roads.     [No.  30.] 

(d    The  best  system  of  maintaining  roads.     [No.  24.] 

(e)  Systems  of  State  aid.     [No.  32,  Minn.;  No.  35,  N.  Y.] 

4.  Effect  on  the  agriculture  of  the  U.  S.  of  the  present  roads.     [Re- 
port of  the  U.  S.  Industrial  Commission,  1900,  vol.  10,  pp.  ccix-ccxvi.] 

5.  The  place  of  canals  in  the  transportation  system  of  a  modern 
European  state.     [O.  Eltzbacher,  The  lesson  of  the  German  water-ways, 
Contemporary  Review,  Dec.,  1904,  86:  778-797.] 

6.  Early  history  of  the  railroad.     [See  a  biography  of  Stephenson, 
by  Smiles,  or  in  one  of  the  encyclopedias  or  biographical  dictionaries.] 

7.  Early  locomotives.     [Thurston,  Hist.,  chap.  4.] 

8.  American  improvements  in  locomotives  and  cars.     [Amer.  Rail- 
way, p.  100  ff .] 

9.  Improvements  in  railroad  construction.     [Same,  p.  1  ff.] 

10.  Feats  of  railroad   construction.     [Same,  p.   47  ff.;   Vernon-Har- 
court,  chap.  2.] 

11.  Modem  bridges.     [Vernon-Harcourt,  chaps.  6,  7.] 

12.  Modern    railroad   management    in   the   United   States.     [Amer 
Railway,  149  ff.] 


ROADS  AND  RAILROADS  301 

13.  Development  of  railroad  organization  and  its  effects.  [Same, 
pp.  344-359.] 

BIBLIOGRAPHY 

A  good  article  on  the  history  of  highways  will  be  found  in  the  Edin- 
burgh Review,  1864,  vol.  119,  p.  340  ff.  See  also  Smiles'  Lives  of  the 
engineers,  and,  for  conditions  in  England  before  the  railroad,  Stanley 
Harris,  Old  coaching  days,  London,  1882,  or  W.  O.  Tristram's  book  on. 
the  same  subject,  London,  1893. 

For  the  bibliography  of  canals  and  railroads  see  Bowker  and  lies,, 
and  Palgrave's  Dictionary.  Among  the  many  books  the  following  will 
probably  be  most  serviceable:  E.  J.  James,  Canal  and  railway;  J.  S. 
Jeans,  Water-ways;  E.  R.  Johnson,  *  Railways;  A.  T.  Hadley,  *  Railroad 
transportation.  All  of  these  include  historical  and  descriptive  matter, 
along  with  economic  criticism.  **  The  American  Railway,  made  up  of 
articles  contributed  by  various  authors  to  Scribner's  Magazine,  has  much 
matter  of  value  and  interest  to  the  student  of  the  history  of  commerce. 


CHAPTER  XXXI 
MEANS  OF  NAVIGATION  AND  COMMUNICATION 

354.  Transportation  by  sailing  vessels  and  steamers.  — 
Steam  has  won  for  itself,  in  the  course  of  the  century,  the 
commanding  place  in  sea  transportation  as  well  as  in  land 
transportation.  The  struggle  with  competitors  has  lasted 
longer  and  the  victory  has  been  less  complete.  Steam  navi- 
gation, however,  offers  such  advantages  in  sureness,  safety, 
speed,  and  cost,  that  sailing  vessels  have  been  forced  out  of 
some  of  the  most  important  branches  of  commerce,  and  must 
content  themselves  with  what  the  steamers  leave  them.  Ref- 
erence to  the  table  at  the  opening  of  the  preceding  chapter 
will  enable  the  student  to  follow  the  development  of  the  means 
of  transportation  by  sea  in  the  course  of  the  century,  and  to 
observe  the  growth  in  importance  of  the  steamer.  In  expla- 
nation of  the  figures  of  carrying-power  it  should  be  said  that 
a  steamer  is  regarded  as  having  three  or  four  times  the  efficiency 
of  a  sailing  vessel  of  equal  tonnage;  such  an  estimate  is,  of 
course,  a  mere  approximation,  and,  indeed,  the  figures  of 
tonnage,  especially  in  the  earlier  part  of  the  century,  are 
themselves  very  uncertain. 

356.  Development  of  sailing  vessels.  —  European  sailing 
vessels  at  the  opening  of  the  century  followed  substantially 
the  clumsy  lines  of  the  old  East  Indiamen.  The  chief  credit 
for  the  improvement  of  wooden  vessels  is  due  to  the  Americans, 
whose  clipper  ships,  marvels  of  grace  and  speed,  were  without 
rivals  in  their  day.  The  clipper  Dreadnought  made  the 
passage  from  New  York  to  Queenstown  in  less  than  ten  days, 
and  in  1846  the  American  Tornado,  starting  from  England 
with  an  early  steamer  of  the  Cunard  line,  reached  America 

302 


MEANS  OF  NAVIGATION  AND  COMMUNICATION      303 

before  her.  The  Great  Republic,  an  American  four-masted 
clipper,  was  of  3,400  tons  and  was  the  largest  sailing  vessel  in 
the  world;  British  ships  of  this  period  rarely  exceeded  a  thou- 
sand tons  in  register. 

The  suggestion  of  iron  for  building  ships  was  met  at  first 
with  ridicule;  some  people,  of  course,  thought  that  an  iron 
ship  would  surely  sink,  and  more  serious  objections  were  found 
in  the  cost,  the  derangement  of  the  compass,  and  the  fouling 
of  the  ship's  bottom.  Iron,  however,  came  gradually  into  use 
for  steamers,  and,  after  1850,  was  applied  more  and  more 
generally  to  the  constructions  of  sailing  vessels.  Iron  vessels 
were  actually  superior  in  buoyancy  to  wooden,  drawing  less 
water  and  carrying  more  cargo  with  a  given  tonnage;  they 
were  cheaper  in  the  long  run,  because  they  are  stronger,  more 
durable,  and  less  exposed  to  destruction  by  fire.  Furthermore, 
iron  was  absolutely  essential  if  the  size  of  ships  was  to  be 
increased.  Builders  of  wyooden  ships  were  limited  by  the 
average  height  of  trees,  and,  in  spite  of  all  devices,  could  not 
construct  a  frame  sufficiently  strong  for  a  vessel  exceeding 
about  300  feet  in  length.  The  size  of  an  iron  or  steel  ship  is 
practically  unlimited.  The  cost  of  ships  constructed  of  metal 
has  decreased  with  advances  in  the  manufacture  of  iron  and 
steel;  remedies,  fairly  satisfactory,  have  been  found  for  the 
derangement  of  the  compass;  and  though  it  has  been  found 
impracticable  to  apply  copper  sheathing  to  steel  ships,  the  foul- 
ing of  the  bottom  is  an  evil  of  minor  importance. 

356.  Relative  decline  of  sailing  vessels,  notwithstanding 
improvements.  —  During  the  second  half  of  the  nineteenth 
century  the  wooden  ship  gradually  disappeared  from  the  seas, 
giving  place  to  vessels  constructed  first  of  iron  and  then  of 
steel.  The  country  which  suffered  most  from  the  change,  as 
will  appear  later,  was  the  United  States;  the  country  best 
prepared  to  profit  by  it  was  England.  The  English  now 
rapidly  enlarged  the  dimensions  of  their  ships,  and  improved 
their  rig  and  model.  Some  of  the  modern  steel  ships  carry 
5,000  tons  of  cargo,  or  even  more.  A  study  of  winds  prevailing 


304  A  HISTORY  OF  COMMERCE 

on  the  ocean,  to  which  an  American  officer,  Maury,  made 
important  contributions,  enabled  sailing  vessels  to  choose  a 
course  which,  on  many  routes,  shortened  the  duration  of  the 
voyage  a  third  or  more.  Steam  has  been  applied  for  handling 
the  cargo,  and  for  managing  the  rudder  and  sails. 

In  spite  of  all  improvements  the  sailing  vessel  has  not  been 
able  to  keep  its  share  of  sea-borne  commerce.  So  much  de- 
pends on  certainty  in  modern  business  that  the  merchant  will 
gladly  pay  a  higher  freight  rate  to  be  relieved  of  the  element  of 
uncertainty  which  is  bound  to  attend  navigation  by  sails. 
Steamers  now  exceed  the  sailing  vessels  of  the  world  not  only 
in  tonnage,  and  still  more  in  effective  carrying  capacity,  but 
even  in  number  also,  if  only  vessels  of  100  tons  and  above  are 
counted. 

357.  Steamers  used  at  first  chiefly  for  internal  navigation.  — 
American  inventors  made  a  practical  success  of  steam  naviga- 
tion soon  after  1800;  a  brief  notice  of  their  work  will  be  given 
later.     The  steamer  was  used  at  first,  however,  chiefly  for 
internal  navigation  and  for  short  coasting  voyages.    It  was  of 
immense  importance  in  furthering  the  development  of  the 
Mississippi  Valley  in  America;   and  it  soon  made  a  place  for 
itself  on  the  European  rivers.    About  1840  there  was  a  rapid 
development  of  steam  transportation  on  the  German  rivers, 
and  this  has  not  ceased  to  grow  in  volume  and  efficiency. 
Chains  have  been  laid  along  some  of  the  river  beds;  on  the  Elbe, 
for  instance,  a  chain  extends  all  the  way  across  Germany  and 
even  into  Bohemia;  and  by  this  means  steamboats  are  enabled 
to  haul  their  barges  up-stream  against  a  strong  current.    The 
application  of  steam  to  ocean  navigation  did  not  become  of 
great  importance  until  about  the  middle  of  the  century.     At 
that  time  only  one  fifth  of  the  steam  tonnage  entering  British 
ports  came  from  foreign  ports;   the  rest  was  employed  still  in 
the  coasting  trade. 

358.  Beginnings  of  steam  navigation  of  the  Atlantic.  —  The 
credit  for  the  first  passage  across  the  Atlantic  by  steam  has 
often  been  ascribed  to  the  American  ship  Savannah,  which 


MEANS  OF  NAVIGATION  AND  COMMUNICATION        305 

arrived  at  Liverpool  in  1819  after  a  voyage  of  twenty-nine  days. 
This  boat,  however,  should  be  classed  as  a  sailing  ship  with 
auxiliary  engine,  rather  than  as  a  steamer;  the  paddle-wheels 
were  arranged  to  be  removed  and  hoisted  on  deck  when  the 
wind  was  fair.  It  made  most  of  the  distance  by  sailing,  and 
the  scanty  supply  of  coal  gave  out  before  it  reached  its  port, 
so  that,  as  the  log  reads,  there  was  "no  cole  to  git  up  steam." 
A  Canadian  boat,  the  Royal  William,  actually  did  make  the 
whole  passage  under  steam  in  1833,  but  stopped  at  Pictou  for 
coal  on  the  way;  while  the  first  regular  steamship  to  cross 
without  recoaling  was  the  Great  Western  in  1838.  The  con- 
siderable intervals  between  these  trips  show  that  -navigation 
of  the  ocean  by  steam  was  still  in  its  experimental  stage. 
Indeed,  in  the  very  year  1838,  in  which  the  Great  Western 
and  the  Sirius  began  the  period  of  practical  application,  a 
leading  English  scientist  set  out  to  prove  by  arguments  and 
statistics  that  the  project  of  connecting  Liverpool  and  New 
York  by  direct  steamer  trips  was  "perfectly  chimerical."  The 
Cunard  Company  was  founded  the  next  year;  and  some  meas- 
ure of  the  appreciation  of  the  American  people  is  given  by  the 
fact  that  when  Mr.  Cunard  arrived  at  Boston  in  1840,  on  the 
first  trip  of  the  new  line,  he  received  (it  is  said)  no  less  than 
1,873  invitations  to  dinner  within  twenty-four  hours! 

359.  Improvement  of  the  means  of  steam  navigation.  — 
The  early  steamers  were  moved  by  paddle-wheels,  which  offer 
special  advantages  for  use  in  shallow  water,  but  which  are  not 
so  efficient  as  the  screw  propeller  in  the  open  sea.  They  re- 
quire heavier  and  bulkier  engines  which  must  be  placed  in 
the  best  part  of  the  ship,  they  waste  power,  and  they  show  the 
effects  of  wear  and  tear  more  quickly.  The  Great  Britain, 
which  made  its  first  voyage  in  1845,  was  noteworthy  on  two 
accounts:  it  was  the  first  large  steamer  (over  3,000  tons)  to  be 
built  of  iron,  and  it  was  the  first  to  introduce  the  screw  in  ocean 
navigation.  These  two  improvements  were  adopted  by  the 
Inman  line  (1850)  and  were  gradually  accepted  by  other 
builders. 


306  A   HISTORY  OF  COMMERCE 

In  the  second  half  of  the  century  various  improvements 
have  added  still  more  to  the  efficiency  of  the  ocean  steamer. 
Early  steamers  ran  under  such  a  low  steam  pressure  that  we 
find  recorded  in  the  log-book  of  one,  "Broke  the  larboard 
steam-pipe,  lapped  it  with  canvas  and  rope-yarn  and  pro- 
ceeded"! Higher  pressures  were  introduced,  and  after  about 
1870  the  steam  was  more  fully  utilized  by  compound  engines, 
of  which  some  have  three  or  even  four  sets  of  cylinders.  The 
introduction  of  twin  screws,  first  applied  to  the  City  of  New 
York  (1889),  has  added  rather  to  the  safety  than  the  speed  of 
a  passage,  by  permitting  further  development  of  the  system 
of  water-tight  compartments. 

360.  Gains  resulting  from  increase  in  size.  —  Another  most 
important  factor  in  the  development  of  efficient  steamers  has 
been  mere  growth  in  size.  A  ship's  carrying  power  varies  as 
the  cube  of  her  dimensions,  while  the  resistance  offered  by  the 
water  increases  only  a  little  faster  than  the  square  of  her 
dimensions.  Large  ships,  therefore,  consume  less  coal  per  ton 
of  cargo,  and  as  large  boilers  and  engines  consume  coal  more 
efficiently  than  small  ones,  there  is  a  double  gain.  Here  again, 
as  in  the  case  of  railroads,  the  introduction  of  cheap  steel  has 
been  of  immense  importance,  and  may  fairly  be  said  to  have 
revolutionized  the  art  of  ship-building  since  1875.  While  in 
1880  nine  tenths  of  British  steamers  were  still  constructed  of 
iron,  the  proportion  had  sunk  in  1890  to  less  than  one  twentieth, 
and  the  employment  of  steel  is  now  almost  universal.  From 
steel  are  constructed  the  great  cargo-carriers  and  the  fast 
express  steamers  of  the  modern  oceanic  service.  Some  concep- 
tion of  the  progress  that  has  been  made  can  be  got  by  a  com- 
parison with  earlier  conditions.  In  1841  the  total  steam  ton- 
nage of  the  British  Empire  was  188,000;  nowadays  a  single 
steamer  (Leviathan,  Majestic)  has  a  tonnage  in  excess  of 
50,000.  The  horse-power  of  British  steamers  in  1841  was  esti- 
mated at  75,000;  nowadays  a  single  steamer,  has  an  indicated 
horse-power  almost  equal  to  that  total.  The  boilers  of  a  modern 
express  steamer  (Teutonic)  were  required  to  evaporate  120  tons 


MEANS  OF  NAVIGATION  AND  COMMUNICATION       307 

of  water  every  hour),  yet  so  thoroughly  is  the  heat  utilized  that 
it  was  said  of  a  steamer  some  years  ago  that  the  burning  of  a 
sheet  of  paper  would  move  a  ton  a  mile. 

361.  Resulting  decline  in  freight  rates.  —  Even  in  1884  a 
competent    writer    could    make    this    interesting    statement: 
twenty  years  before,  a  steamer  of  3,000  tons  had  to  allow  for 
coal  and  machinery  on  a  given  voyage  2,200  tons,  and  must 
confine  the  cargo  to  the  remaining  space;    at  the  date  when 
he  wrote  the  great  improvements  had  reversed  the  proportions, 
so  that  only  800  tons  were  needed  for  motive  power  and  2,200 
were  devoted  to  cargo.     Manifestly  steamship  owners  would 
be  enabled  by  a  change  of  this  character  to  lower  greatly  the 
charges  for  transportation,  and  freight  rates  have,  in  fact, 
declined  steadily  in  the  course  of  the  century.     Lancashire 
spinners  could  transport  their  raw  cotton  from  the  source  of 
supply  in  America  at  one  sixteenth  the  cost  which  they  had 
to  bear  sixty  years  before.     Even  in  the  last  quarter  of  the 
century  ocean  freight  rates  dropped  to  one  half,  one  third, 
or  even  one  fourth,  of  the  figures  prevailing  in  1874. 

Conditions  such  as  have  been  thus  briefly  suggested  explain 
the  immense  increase  in  sea-borne  traffic  during  the  century. 
For  the  carriage  of  that  traffic  the  merchant  has  now  at  his 
disposal  not  only  the  sailing  ship  and  the  "tramp,"  the  general- 
utility  steamer,  but  also  a  multitude  of  special  boats  for  special 
services:  the  tank-steamer  for  transporting  liquids  cheaply, 
the  cattle  steamer  for  live  stock,  and  the  steamer  with  refrig- 
erators for  dead  meat,  the  fruit  steamer,  etc.  The  use  of  oil 
as  fuel  and  the  introduction  of  explosion  motors  of  the  Diesel 
type  promise  to  raise  still  higher  the  efficiency  of  transportation. 

362.  Modern  ship  canals.  —  This  survey  of  the  develop- 
ment of  the  means  of  navigation  may  fitly  be  closed  by  a 
brief  consideration  of  the  modern  ship  canals  and  their  con- 
tribution to  the  growth  of  trade.    There  were,  in  1900,  a  round 
dozen  of  these  canals,  capable  of  receiving  sea-going  ships. 
Some,  serving  special  ports   (Amsterdam,  Manchester,  etc.) 
were  of  purely  local  importance.     Others  have  disappointed 


308  A  HISTORY  OF  COMMERCE 

the  expectations  of  their  promoters.  The  canal  across  the 
isthmus  of  Corinth  has  been  a  distinct  failure,  and  the  Kaiser 
Wilhelm  Canal,  between  the  North  and  Baltic  seas,  has  not 
yet  acquired  the  share  of  commerce  which  its  projectors  prom- 
ised for  it.  Leaving  aside  the  St.  Mary's  canal  in  America 
there  was  up  to  1914  but  one  ship  canal  which  had  proved  its 
commanding  importance,  namely  the  Suez  Canal. 

A  map  of  the  world  shows  two  narrow  strips  of  land  left 
by  nature  almost  as  though  with  the  design  of  stimulating 
men  to  pierce  them,  the  isthmus  of  Suez  and  the  isthmus  of 
Panama.  A  canal  at  either  point  unites  not  countries  or  small 
seas,  but  continents  and  great  oceans,  and  saves  thousands  of 
miles  in  the  routes  of  trade.  The  American  isthmus  presents 
great  difficulties  to  the  construction  of  a  canal,  but  the  Suez 
route  runs  through  a  district  composed  almost  entirely  of 
sand,  with  no  elevation  above  50  or  60  feet  and  with  consider- 
able parts  actually  below  the  level  of  the  sea. 

363.  The  Suez  Canal,  and  its  services  to  commerce.  —  The 
scheme  of  reopening  the  route  across  the  isthmus  of  Suez, 
which,  as  said  in  the  first  chapter,  had  been  made  practicable 
for  small  vessels  before  the  time  of  Christ,  and  had  been  ren- 
dered useless  in  the  Middle  Ages,  was  certain  to  rise  as  com- 
merce between  Europe  and  the  East  increased  in  volume.  It 
is  said  to  have  been  entertained  by  Napoleon  I  among  others, 
but  the  credit  for  its  accomplishment  belongs  to  a  French 
engineer  and  promoter,  Ferdinand  Lesseps.  After  more  than 
ten  years  spent  in  preparation,  work  was  finally  begun  in  1860, 
and  the  canal  was  ready  for  use  in  1869. 

The  success  of  the  Suez  Canal  may  be  gaged,  from  the 
investor's  standpoint,  by  the  fact  that  dividends  have  risen  to 
20  per  cent,  from  the  public  standpoint  by  the  fact  that  the 
tonnage  accomodated  by  the  canal  in  1891  exceeded  ten  million, 
in  1907  exceeded  twenty  million,  and  in  general  has  been  roughly 
equal  to  the  tonnage  entering  and  leaving  any  one  of  the  great 
seaports  of  the  world.  The  duration  of  the  voyage  to  In- 
dia has  been  shortened  by  a  third,  and  more  than  half  of 


MEANS  OF  NAVIGATION  AND  COMMUNICATION       309 

the  voyages  to  the  East  are  now  made  through  the  canal 
rather  than  around  the  Cape  of  Good  Hope.  The  canal  has 
been  an  important  influence  in  furthering  the  growth  of  the 
world's  steam  tonnage,  for  it  is  practically  barred  to  sailing 
vessels  by  the  difficulties  of  navigation  in  the  Red  Sea;  no 
sea-going  sailing  vessel  has  passed  through  it  for  years.  It 
has  made  possible  the  movement  of  bulky  wares  formerly 
excluded  from  the  trade  with  the  East  by  the  expense  of  trans- 
portation: rice,  wheat,  petroleum,  and  coal.  It  has  not,  how- 
ever, produced  one  result  which  was  expected,  the  diversion 
of  trade  to  the  countries  of  southern  Europe,  as  in  the  time 
before  the  passage  around  the  Cape  had  been  discovered,. 
Three  quarters,  in  tonnage,  of  the  ships  using  the  canal  have 
been  British,  and  ships  from  the  countries  of  northern  Europe 
make  up  most  of  the  remainder. 

364.  The  Panama  Canal.  —  Lesseps  could  not  match  in 
America  the  success  which  he  had  attained  at  Suez.  A  French 
company  promoted  by  him  started  work  at  Panama  in  1881, 
but  became  bankrupt  before  it  had  made  much  progress. 
Mismanagement  at  home,  disease  on  the  isthmus,  above  all 
the  tremendous  difficulties  which  nature  has  placed  in  the  way 
of  a  canal  at  sea  level,  contributed  to  this  result.  The  United 
States  took  up  as  a  national  enterprise  a  work  which  now 
offered  but  little  attraction  to  private  capital,  bought  out  the 
French  company,  and  in  1904  made  arrangements  to  begin 
operations.  Taught  by  the  experience  of  the  past  the  govern- 
ment decided  on  a  canal  with  locks,  reaching  an  altitude  of 
85  feet  above  sea  level,  and  took  the  precautions  suggested  by 
sanitary  science  to  protect  the  laborers  against  the  menaces 
of  plague,  yellow  fever  and  malaria.  Under  army  engineers 
the  work  was  carried  on  to  a  successful  conclusion,  and  the 
canal  was  opened  to  traffic  in  August,  1914.  The  cost  of  con- 
struction was  about  $350,000,000. 

In  the  first  year  of  its  operation  the  Panama  Canal  accomo- 
dated  about  five  million  tons  of  shipping;  in  the  year  ending  in 
1920  the  figure  had  risen  to  about  ten.  The  dislocation  of 


310  A  HISTORY  OF  COMMERCE 

traffic  caused  by  the  European  War,  and  interruptions  oc- 
casioned by  earthslides  in  the  Gaillard  cut,  made  the  growth  of 
traffic  slow  and  somewhat  irregular.  Figures  for  the  traffic 
of  the  Suez  Canal  given  in  the  preceding  section  show  that  the 
canal  across  the  American  isthmus  could  not  rival  in  its  early 
years  the  position  of  its  older  competitor  for  the  world's  trade. 
Even  more  impressive  is  a  comparison  with  the  figures  of 
traffic  through  the  Sault  Ste.  Marie  canals,  on  the  northern 
border  of  the  United  States.  The  cargo  tonnage  by  the  lake 
route  in  1920  was  over  eight-fold  that  carried  through  the 
isthmus.  The  Panama  Canal,  to  1920,  had  just  about  paid 
the  expense  of  operation  and  maintenance.  There  seems  no 
question,  however,  that  apart  from  important  military  con- 
siderations, the  construction  of  the  canal  will  be  justified  by 
the  contribution  that  it  will  make  to  the  commercial  develop- 
ment of  the  Pacific. 

365.  The  postal  service  about  1800.  —  Increased  facility  in 
sending  communications  to  a  distance  has  attended  the  im- 
provement of  the  means  of  transportation  by  land  and  sea. 
During  the  early  part  of  the  century  the  postal  service  was 
still  cramped  by  old  methods  and  high  charges.  In  England, 
for  instance,  in  the  period  after  1827  and  before  the  reform, 
postage  of  fourpence  (eight  cents)  was  charged  for  the  car- 
riage of  a  letter  any  distance  not  exceeding  15  miles,  and  the 
postage  increased  with  the  distance:  8  pence  for  80  miles, 
12  pence  for  300,  15  pence  for  600,  etc.  The  government 
charged,  in  some  cases,  nearly  five  hundred  times  the  actual 
cost.  Under  these  conditions  little  use,  naturally,  was  made 
of  the  post,  and  it  carried,  on  an  annual  average,  only  three 
letters  for  each  member  of  the  population.  Many  letters  were 
sent  illicitly  by  private  means  of  conveyance,  and  the  postal 
revenue  remained  nearly  stationary  for  many  years  before 
1839,  in  spite  of  the  growth  of  the  country  in  population  and 
business  activity.  Conditions  were  better  in  some  states  of 
the  Continent,  notably  Germany,  but  would  still  be  regarded 
everywhere  as  backward. 


MEANS  OF  NAVIGATION  AND  COMMUNICATION       311 

366.  Postal  reforms  and  their  results.  —  A  new  era  in  the 

English  postal  system  dates  from  the  introduction  by  Rowland 
Hill  of  the  penny  post;  after  1840  a  letter  weighing  not  over 
half  an  ounce  could  be  sent  to  any  place  in  the  United  Kingdom 
if  prepaid  by  a  stamp  costing  one  penny.  Similar  reductions 
were  adopted  in  other  countries;  and  new  facilities  were  ex- 
tended for  the  mailing  of  cards,  printed  matter,  and  periodicals, 
samples  of  merchandise,  etc.  An  international  Postal  Union 
was  established  in  1874  among  the  chief  countries  of  the  world, 
which  agreed  on  common  rates  of  foreign  postage,  and  arranged 
to  cooperate  in  carrying  on  the  postal  service.  This  Union 
has  improved  greatly  the  means  of  distant  postal  communica- 
tion, and  has  grown  to  include  practically  the  whole  civilized 
world,  with  the  exception  of  China. 

It  is  easy  to  follow  the  effects  of  the  various  reforms  and 
improvements  in  the  increased  use  of  the  mails.  In  the  United 
Kingdom,  for  instance,  the  number  of  letters  sent  per  head  of 
the  population  has  increased  as  follows:  1839,  3;  1840,  7; 
1872,  28;  1882,  35.  The  post  has  developed  from  a  luxury 
into  a  social  and  industrial  necessity,  and  the  extent  to  which 
it  is  used  in  any  country  furnishes  a  fair  index  by  which  to 
judge  of  the  country's  advancement.  The  following  countries 
may  be  taken  as  examples,  the  figures  showing  the  number 
of  pieces  of  mail  sent  annually  about  1900,  per  head  of  the 
population:  United  States,  100;  United  Kingdom,  85;  Ger- 
many, 81;  France,  55;  Italy,  17;  Japan,  13;  Spain,  12;  Rus- 
sian Empire,  5. 

367.  The  telegraph  before  the  application  of  electricity.  — 
In  passing  to  another  subject,  electricity,  we  may  still  consider 
ourselves  as  continuing  the  discussion  of  the  applications  of 
steam,  so  dependent  are  we  still  on  coal  and  steam  for  the 
means  of  producing  and  using  this  new  force.     Among  the 
manifold  applications  of  electricity  in  modern  life  we  must 
here  confine  ourselves  to  its  use  as  a  means  of  communication. 

The  telegraph,  a  word  meaning  "far-writing,"  existed  long 
before  men  thought  of  applying  electricity,  to  its  operation. 


.312  A  HISTORY  OF  COMMERCE 

The  need  of  sending  messages  quickly  to  distant  places  had 
led  in  many  countries,  before  1800,  to  a  system  of  signaling 
by  means  of  instruments  much  like  the  semaphores  of  the 
modern  railroad.  The  crudeness  of  such  a  system  is  apparent. 
Communication  depended  entirely  on  clear  weather  and  careful 
observers.  Under  favorable  conditions  the  speed  of  signaling 
was  really  surprising;  a  despatch  could  be  sent,  for  instance, 
from  Paris  to  Strassburg,  by  45  stations,  in  65  minutes.  It 
was  estimated,  however,  that  of  the  messages  received  only  a 
quarter  reached  their  destination  promptly,  another  quarter 
were  from  six  to  twenty-four  hours  late,  while  half  had  to  be 
•  forwarded  by  the  ordinary  post.  Aerial  telegraphy,  therefore, 
never  attained  to  great  importance,  and  was  restricted  largely 
to  government  business. 

368.  The  electric  telegraph.  —  Practical  telegraphy  dates 
from  about  1840,  when  the  inventions  of  the  American  Morse, 
and  the  Englishman  Wheatstone,  made  the  use  of  electricity 
possible  wherever  an  insulated  conductor  could  be  laid.  Im- 
perfect as  were  the  early  instruments  they  accomplished  their 
purpose  with  remarkable  success.  The  telegraph,  indeed,  has 
probably  undergone  less  change  in  the  course  of  its  extension 
and  practical  development  than  any  other  invention  of  equal 
importance.  We  must  look,  therefore,  to  explain  the  great 
extension  of  its  use,  as  shown  in  the  statistics  at  the  opening 
of  the  chapter,  not  so  much  for  technical  improvements  as 
for  a  recognition  of  the  value  of  the  telegraph  on  the  part  of 
the  public.  It  found  an  immediate  application  on  the  rail- 
roads, and  provided  them  with  a  means  of  intelligence  and 
control  almost  as  important  as  is  the  nervous  system  to  a 
human  being.  It  was  used  at  once,  moreover,  by  governments. 
Little  by  little  it  made  its  way  into  business  life,  where  it  has 
found  its  chief  field  of  usefulness,  and  where  it  has  effected 
some  most  important  changes,  to  be  noted  later. 

Since  about  1880  the  telephone  has  made  a  place  for  itself 
beside  the  telegraph,  serving  the  convenience  of  individual 
consumers  as  the  telegraph  serves  the  needs  of  the  great 


MEANS  OF  NAVIGATION  AND  COMMUNICATION       313 

captains  of  industry  and  commerce,  and  constantly  strengthen- 
ing its  position  also  as  an  instrument  for  the  transaction  of 
business. 

369.  Submarine  telegraph  lines.  —  The  telegraph,  which 
soon  became  of  national  and  international  importance,  was 
still  of  restricted  influence  so  long  as  it  was  confined  to  the 
land  lines.    Experiments  on  a  modest  scale,  about  the  middle 
of  the  century,  had  shown  the  possibility  of  conducting  the 
electric  current  through  an  insulated  cable  under  water,  and 
the  world  waited  only  for  men  of  faith  and  energy  to  connect 
continents  by  submarine  lines.    A  group  of  prominent  Amer- 
icans, of  whom  Cyrus  W.  Field  was  the  leader,  took  up  the 
project  of  an  Atlantic  cable,  failed  twice  in  their  attempts  to 
lay  it,  and  succeeded  in  1858  only  to  find,  after  a  few  days  of 
successful  operation,  that  the  cable  had  ceased  to  work.    The 
project  rested  during  the  Civil  War,  but  in  1866  was  finally 
accomplished.     The  extension  of  submarine  cables  since  that 
time  may  be  followed  in  the  statistics  of  the  preceding  chapter. 
Cables  now  unite  the  peoples  of  all  civilized  nations,  and  form 
an  indispensable  part  of  the  modern  world  of  thought,  politics, 
and  commerce. 

370.  Wireless  telegraphy.  —  To  the  men  who  were  strug- 
gling to  unite  continents  by  electrical  conductors  the  idea  that 
connection  for  the  purposes  of  communication  could  be  estab- 
lished without  any  conductors  whatever  would  have  seemed  an 
idle  dream.     Yet  this  result  has  been  attained  by  wireless 
telegraphy.     Electrical  waves  sent  broadcast  from  a  trans- 
mitting station  affect  delicate  instruments  "tuned"  to  receive 
them  at  a  distance  of  thousands  of  miles,  and  enable  messages 
to  be  sent  across  unsounded  seas  or  untraversed  deserts  with 
equal  facility.    Wireless  telegraphy  has  not  displaced  the  older 
form,  which  still  is  and  probably  always  will  be  more  reliable 
in  operation.     For  many  purposes,  however,  it  is  a  useful 
supplement,  and  for  one  important  use  it  is  an  indispensable 
substitute.    Wireless  instruments  can  be  established  as  readily 
on  board  ship  as  on  land,  and  so  permit  ships  to  communicate 


314  A  HISTORY  OF  COMMERCE 

with  each  other  and  with  the  shore.  Ships  can  summon  aid  in 
time  of  emergency,  and  can  regularly  keep  in  touch  with  their 
agents  so  that  their  movements  can  be  directed  to  suit  the  need 
of  markets.  In  1914  over  500  wireless  stations  had  been  es- 
tablished on  land,  and  nearly  ten-fold  that  number  on  board 
ship. 

QUESTIONS  AND  TOPICS 

1.  American  clippers.     [Marvin,  Amer.  merchant  marine,  chap.  12; 
Clark,  in  Harper's  Magazine,  1908,  vol.  117,  p.  92  ff.] 

2.  Is  it  probable  that  steamers  will  drive  sailing  vessels  entirely 
from  the  seas?    People  once  thought  that  railroads  would  cause  a  decline 
in  the  demand  for  draft-horses;   has  that  been  the  case? 

3.  The  life  of  the  merchant  sailor.     [W.  Clark  Russell,  Scribner's 
Magazine,  July,  1893,  14:    3-19.] 

4.  Early  voyages  by  steam  across  the  Atlantic.    [Fry,  33-42.] 

5.  Improvement  of  marine  engines.     [Thurston,  chap.  5:   Maginnis, 
chap.  11  (technical,  good  plates  and  pictures);  Chadwick  in  Ocean  steam- 
ships, pp.  1-56.] 

6.  The  building  of  an  ocean  steamer.    [Rideing,  in  Ocean  steamships, 
pp.  91-111.] 

7.  Freight  traffic  by  ocean  steamers.     [Gould,  Scribner's  Magazine, 
Nov.,  1891,  or  in  Ocean  steamships,  p.  217  ff.] 

8.  Passenger   travel.      [Same,    Magazine,   April,    1891,   Steamships, 
p.  112  ff.] 

9.  Steamship  lines  of  the  world.    [Hunt,  Scribner's  Magazine,  Sept., 
1891,  Ocean  steamships,  p.  253  ff.;    Encyc.  Brit.] 

10.  Write  the  history  of  one  of  the  great  steamship  companies: 
Cunard,  Inman,  White  Star,  North  German  Lloyd,  Hamburg  American, 
etc.     [Fry,  Maginnis.] 

11.  Engineering  achievements  in  modern  ports.     [Vernon-Harcourt, 
chaps.  9,  10.] 

12.  The  Manchester  ship  canal.    [Vernon-Harcourt,  chap.  13;  Porritt 
in  Yale  Review,  vol.  3,  295-310.] 

13.  The  Corinth  Canal.    [Vernon-Harcourt,  chap.  14;  U.  S.  Monthly 
Summary,  Dec.,  1901.] 

14.  Construction  of  the  Suez  Canal.     [Vernon-Harcourt,  chap.  14; 
Encyc.] 

15.  Effects  of  the  Suez  Canal.    [Fairlie;    U.  S.  Monthly  Summary, 
Dec.,   1901.] 

16.  Effect  of  the  Panama  Canal  on  routes  and  traffic.    [Hutchinson 


MEANS  OF  NAVIGATION  AND  COMMUNICATION       315 

gives  a  study  of  results  as  anticipated;  see  U.  S.  Statistical  Abstract  and 
periodical  literature  for  actual  results.] 

17.  Development  of  the  English  postal  system  in  the  nineteenth 
century.    [Social  England,  6:  237-246;   Ward,  Reign  of  Queen  Victoria, 
2:    118  ff.] 

18.  The  railroad  mail  service.     [Amer.  railway,  p.  312  ff.] 

19.  From  the  figures  of  trade  given  in  sect.  319  and  from  the  figures 
of  population  in  the  Statesman's  Year-Book  a  table  can  be  constructed 
giving  the  commerce  per  head  of  the  people  of  different  states,  for  com- 
parison with  the  postal  statistics  in  the  text.    Note,  however,  that  these 
statistics  include  domestic  mail,  while  figures  of  internal  commerce  are 
lacking.    The  U.  S.,  for  instance,  would  seem  to  have  but  slight  commerce 
per  capita,  in  spite  of  the  active  use  of  the  mails,  because  the  bulk  of  our 
trade  is  internal  and  does  not  appear  in  statistics. 

20.  Development  of  the  telegraph.     [lies,  chap.  13.] 

21.  Extension  of  the  telegraph  system  in  the  United  States.    [Eckert 
in  Depew,  One  hund.  years,  chap.  19.] 

22.  History  of  the  submarine  telegraph.     [lies,  chap.  14;    Charles 
Bright,  The  story  of  the  Atlantic  cable,  N.  Y.,  Appleton,  1903,  $1;  U.  S. 
Monthly  Summary,  Commerce  and  Finance,  Jan.,  1899,  pp.  1653-1675.] 

23.  Development  of  the  telephone.    [Hudson  in  Depew,  One  hundred 
years,  chap.  20.] 

24.  Distribution  of  wireless  stations.     [Map  in  Statesman's   Year 
Book,  1914,  plate  4.] 

BIBLIOGRAPHY 

For  carefully  studied  accounts  of  ocean  transportation  in  its  different 
aspects  see  Joseph  R.  Smith,  *  Organization  of  ocean  commerce,  Boston, 
1905,  The  ocean  carrier,  by  the  same  author,  N.  Y.,  1908,  and  Emory  R. 
Johnson  and  G.  G.  Huebner,  *  Principles  of  ocean  transportation,  N,  Y., 
1919.  These  books  offer  bibliographies  which  may  be  used  to  supplement 
references  here  given.  On  the  development  of  sailing  ships,  beside  the 
older  books  by  Lindsay  and  Cornewall-Jones,  see  Adam  W.  Kirkaldy, 
British  shipping,  London,  1914,  A.  H.  Clark,  The  clipper  ship  era,  1911, 
books  by  Basil  Lubbock  on  ships  of  the  clipper  period,  and  references  given 
later  for  American  shipping;  on  steamships  there  are  satisfactory  accounts 
in  Fry  and  Maginnis  and  in  the  collection  entitled  Ocean  steamships. 
Excellent  chapters  on  the  different  ship  canals,  with  further  references, 
are  given  in  Johnson  and  Huebner.  See  also  Lincoln  Hutchinson,  The 
Panama  Canal,  N.  Y.,  1915. 

Summary  accounts  of  the  development  of  the  postal  service,  satis- 
factory for  the  purposes  of  most  readers  of  this  book,  will  be  found  in  the 
encyclopedias.  A  scholarly  study  of  the  development,  particularly  in  the 


316  A   HISTORY  OF  COMMERCE 

first  half  of  the  nineteenth  century,  is  provided  by  J.  C.  Hemmeon,  History 
of  the  British  post  office,  Cambridge,  Harvard  University,  1912.  The 
various  applications  of  electricity  are  fully  treated  by  lies.  Other  books 
aiming  to  describe  electrical  applications  for  the  general  public  are  by 
Tunzelmann  in  the  Contemporary  Science  Series,  Park  Benjamin,  and 
Philip  Atkinson.  Consult  the  A.  L.  A.  Catalogue  for  further  references. 


CHAPTER  XXXII 

THE  WARES   OF   COMMERCE 

371.  Effect  on  commerce  of  technical  progress.  —  It  is  now 

time  to  discuss  the  effects  on  commerce  of  the  technical  changes 
which  have  been  described  in  preceding  chapters.  Following 
back  the  substance  of  those  chapters,  the  effects  may  be  briefly 
summarized  as  follows.  First,  an  improvement  in  the  means 
of  communication  and  transportation, 


and  goods  of  different  regions  vastly  nearer  to  each  other  than 
they  have  ever  been  before  in  the  world's  history.  Second,  a 
control  over  the  forces  and  materials  of  nature  which  has 
enabled  men  to  manufacture  old  wares  more  cheaply  and  new 
wares  which  were  before  unknown.  Third,  as  a  result  of  the 
development  of  the  transportation  system,  the  settlement  of 
new  countries  with  virgin  soil  and  rich  mineral  resources,  and 
the  connection  of  these  countries  with  each  other  and  with 
the  countries  of  the  Old  World. 

Of  these  three  factors  any  one  alone  would  be  a  powerful 
stimulus  to  trade;  the  three  working  together  account  for  the 
astounding  growth  of  commerce  during  the  nineteenth  century. 
Comparing  the  present  and  earlier  periods  we  may  characterize 
the  advance  by  saying  that  in  the  Middle  Ages  commerce 
concerned  itself  almost  entirely  with  the  luxuries  of  life;  that 
in  the  modern  period  (1500-1800)  it  served  mainly  men's 
comfort;  while  in  the  recent  period,  since  1800,  it  has  become 
necessary  to  the  very  existence  of  a  considerable  part  of  man- 
kind. 

372.  Growth  of  the  sphere  of  commerce  and  resulting 
specialization  of  production.  —  The  world  has  gone  far  toward 
realizing  the  ideal  of  the  early  free  trader,  that  wherever  a  man 

317 


318  A   HISTORY  OF  COMMERCE 

might  be,  he  should  share  in  the  productive  advantages  of  all 
other  men,  wherever  they  might  be.  Customs  tariffs  have 
been  able  to  check  the  movement  of  commerce;  they  have 
been  powerless  to  stop  it.  The  sphere  of  ordinary  trade, 
which  was  once  the  manor,  a  mere  hamlet  or  village;  which 
grew  in  time  to  be  the  town  with  its  surrounding  country; 
then  included  the  whole  nation;  and  became  in  the  modern 
period  international,  —  this  sphere  of  regular  and  ordinary 
trade  is  now  the  world.  Whole  countries  now  specialize  in 
the  production  of  different  articles,  as  individuals  or  small 
districts  once  did. 

Northwestern  Europe  has  become  a  great  factory,  drawing 
its  food  supplies  and  raw  materials  from  distant  parts  of  the 
world,  and  exporting  manufactured  products  in  exchange. 
Beside  Europe  stands  the  continent  of  North  America,  supply- 
ing in  large  part  the  needs  of  its  own  people  for  manufactures, 
and  producing  a  surplus  for  export.  North  America,  indeed, 
stands  in  one  aspect  above  Europe,  for  it  has  unexhausted 
stores  of  natural  resources  which  it  lavishes  on  other  parts  of 
the  world  less  richly  endowed.  The  other  continents  take 
subordinate  positions.  They  are  enabled  by  commerce  to 
procure  from  Europe  and  North  America  the  manufactured 
goods  which  they  require,  and  specialize  in  the  production  of 
various  food  supplies  and  raw  materials  for  the  means  of 
purchasing  these  goods. 

373.  Abolition  of  the  slave  trade.  —  The  description  of  the 
present  world-organization  of  production,  and  of  the  exchange 
of  wares  to  which  it  gives  rise,  belongs  to  the  department  of 
commercial  geography.  It  is  proper  here,  however,  to  call 
attention  to  some  of  the  marked  changes  in  the  wares  of  trade 
which  have  taken  place  since  1800. 

One  ware  which  was,  before  1800,  of  great  commercial 
importance,  and  which  yielded  immense  profits  to  those  who 
dealt  in  it,  has  disappeared  with  the  abolition  of  the  slave 
trade  by  all  civilized  nations.  Long  before  the  abolition  of 
slavery  itself,  humanity  revolted  against  the  horrors  of  the 


THE   WARES  OF  COMMERCE  319 

" middle  passage,"  and  the  protests  took  effective  form  about 
1800;  the  states  of  Europe  and  America  agreed,  one  after 
another,  that  the  slave-trade  under  their  flags,  and  for  the 
supply  of  their  territories,  should  cease. 

374.  The  great  wares  of  commerce.  _Coal.  —  For  the  pur- 
pose of  a  summary  survey  the  most  important  wares  of  com- 
merce before  1800  can  be  designated  as  belonging  to  the  two 
classes,  colonial  products  and  te^ilea.    We  shall  have  to  note, 
in  ensuing  sections,  striking  changes  affecting  both  of  these 
classes,  and  the  addition  to  the  important  wares  of  commerce 
of  two  new  classes,  mineral  products  and  foodstuffs. 

Taking  first  the  mineral  products,  and  including  coal  with 
them,  as  common  usage  justifies  us  in  doing,  we  find,  at  first 
sight,  that  this  article  takes  a  far  lower  rank  among  the  modern 
wares  than  we  should  expect  from  its  commanding  importance 
in  industrial  life.  There  has  been,  it  is  true,  a  great  growth  in 
the  coal  trade,  and  considerable  quantities  are  exported  from 
England,  Belgium,  Germany,  on  occasion  the  United  States, 
etc.,  for  use  in  countries  lacking  coal  mines,  or  at  sea.  There 
is  an  immense  internal  commerce  in  coal.  In  1900  more  than 
half  of  the  tonnage  carried  on  the  railroads  of  the  United 
States  consisted  of  mining  products;  and  of  these  coal  certainly 
formed  a  very  considerable,  perhaps  the  major,  part.  Still 
_coal  does  not  rank  among  the  chief  wares  of  foreign  trade. 

375.  Metals  and  Manufactures.  —  An  explanation  of  the 
comparative  insignificance  of  coal  in  foreign  trade  is  found  in 
its  bulk.    An  active  industrial  people  can  compress  the  value 
of  coal,  as  it  were,  by  using  it  near  the  mines  for  the  production 
and  transformation  of  other  materials.    Coal  is  transmuted  into 
iron  and  manufactures,  and  so  loses  its  identity,  though  it 
remains  still  the  real  power  behind  the  exports  of  that  character. 

( 'ommerce  in  iron  and  stool,  and  the  manufactures  depending 
on  thorn,  has  increased  enormously  in  the  course  of  the  century, 
as  the  reader  may  readily  suppose.  Supplies  of  iron  and 
machinery  flow  from  the  centers  of  production  to  the  less 
advanced  countries,  and  the  simpler  tools  penetrate  every 


320  A  HISTORY  OF  COMMERCE 

nook  and  corner  of  the  earth.  Copper  has  grown  greatly  in 
importance,  as  its  use  for  electrical  appliances  has  extended, 
and  now  forms  a  considerable  item  in  exchanges  of  countries 
like  the  United  States  and  Germany. 

376.  Petroleum.  —  Nor  is  the  new  commercial  significance 
of  mineral  products  confined  to  the  metals.    In  the  last  half 
century  the  trade  in  mineral  oil  (petroleum,  "kerosene")  has 
become  a  necessary  part  of  the  world's  economy.    One  result 
of  the  great  improvements  in  manufactures  and  transportation 
was  a  demand,  from  all  sides,  for  more  light.    Artificial  illu- 
mination was  needed  for  the  full  utilization  of  machinery  and 
means  of  transportation;  and  to  provide  light  for  the  newspaper 
reading,  study,  and  recreation  to  which  people  gave  themselves 
in  increasing  numbers.    The  first  half  of  the  century  witnessed 
many  improvements:   the  invention  of  matches,  the  introduc- 
tion of  glass  lamp-chimneys,  the  spread  of  gas  lighting,  and 
the  use  of  new  oils  for  illumination.     No  previous  advance, 
however,   compares  in  importance  with  the  discovery  that 
crude  petroleum  could  be  made  the  source  of  a  cheap  and 
efficient   means   of   illumination.      The   development   of   the 
petroleum  trade  in  the  space  of  little  more  than  a  generation 
is  a  matter  of  common  knowledge,  and  is  readily  explained  by 
the  importance  of  the  service  which  it  performs. 

377.  The  grain  trade ;   slight  development  before  1800.  — 
Important  and  characteristic  as  the  trade  in  mineral  products 
has  grown  to  be  in  the  nineteenth  century,  it  is  still  far  from 
first  place  among  the  branches  of  the  world's  commerce.    The 
primacy  belongs,  without  question,  to  the  trade  in  foodstuffs, 
especially  grain. 

Before  the  development  of  the  modern  system  of  transpor- 
tation commerce  in  foodstuffs  concerned  itself  largely  with 
the  condiments  rather  than  the  aliments,  with  spices  and 
seasoning  rather  than  the  substantial  food  staples.  Even  at 
a  freight  rate  of  15  cents  per  ton-mile  (and  the  expense  of 
transportation  on  European  roads  before  1800  was  certainly 
far  above  that),  wheat  at  $1.50  a  bushel  would  be  limited  to 


THE  WARES  OF  COMMERCE  321 

a  trade-radius  of  330  miles ;  the  whole  value  of  the  wheat  would 
be  consumed  in  transporting  it  that  distance.  Transportation 
by  sea  was,  of  course,  much  less  costly,  and  enabled  limited 
amounts  of  food  to  be  imported  under  favorable  conditions. 
Still,  food  has  to  be  grown  on  land,  and  often  on  land  distant 
from  any  means  of  water  carriage ;  and  the  countries  of  Europe 
were  forced  in  general  to  a  policy  of  self-sufficiency,  raising  the 
requisite  supplies  of  food  at  home  under  conditions  however 
unfavorable.  We  may  appreciate  the  short  space  of  time 
separating  us  from  this  state  of  affairs  by  noting  that  in  France, 
even  in  1817,  people  were  dying  of  famine  in  Lorraine,  while 
wheat  was  abundant  in  Brittany;  the  carriage  of  provisions 
from  one  province  to  the  other  quadrupled  prices.  In  Russia, 
even  later  (Pskov,  1845),  the  same  conditions  prevailed. 

378.  Extent  and  importance  of  the  grain  trade  at  present.  — • 
Grain  formed,  therefore,  one  of  the  least  considerable  of  the 
wares  of  foreign  commerce  before  1800.  A  French  economist 
estimated  the  international  trade  in  grain  at  30  million  bushels 
at  most.  From  that  figure,  comparatively  insignificant,  the 
grain  trade  of  the  world  had  risen,  even  in  1887,  to  over  1,500 
million  bushels;  grain  formed  then,  in  value,  almost  one  tenth 
of  the  total  of  the  wares  of  trade,  and  in  importance  far  ex- 
ceeded any  other  ware.  The  expense  of  transportation  had 
undergone  such  a  vast  diminution  that  one  day's  wages  of  a 
common  laborer  would  pay  for  the  carriage  over  a  thousand 
miles  of  all  the  grain  and  meat  which  he  needed  for  a  year's 
subsistence. 

It  would  be  interesting,  if  time  permitted,  to  note  the 
far-reaching  social  and  political  effects  of  this  revolution.  We 
must,  however,  confine  ourselves  to  its  economic  aspect.  The 
English  people,  to  take  the  most  striking  example,  depend  for 
more  than  half  of  their  food  supply,  perhaps  two  thirds  of 
their  wheat  supply,  on  imports  from  abroad.  It  is  said  that 
in  every  month  in  the  year  wheat  is  harvested  in  some  country, 
of  the  northern  or  of  the  southern  hemisphere,  for  the  English 
market;  a  Floating  Cargoes  List  reported  163  vessels  bound 


322  A  HISTORY  OF  COMMERCE 

for  England  with  cereals,  at  sea  at  one  time.  As  formerly  the 
citizens  of  London  depended  on  the  farmer  of  a  nearby  county 
for  the  supply  of  his  daily  bread,  so  now  the  inhabitants  of 
England  in  general  depend  upon  people  in  the  Dakotas,  in 
California,  in  the  Argentine  Republic,  in  Egypt,  in  India,  or 
in  Australia.  The  Englishman  is  enabled,  by  commerce,  to 
share  in  the  agricultural  advantages  of  any  and  all  those 
countries;  he  applies  himself  to  his  specialty  and  exchanges 
the  product  for  his  food. 

379.  Commerce   in  other  foodstuffs.  —  In  some  respects 
even  more  striking,  though  on  the  whole  of  far  less  importance, 
has  been  the  growth  of  foreign  commerce  in  stock  and  meat. 
About  1800  the  common  way  of  marketing  meat  was  to  drive 
it  to  market  on  the  hoof;  the  trip  might  consume  a  number  of 
days,  and  the  animal  would  arrive  in  poor  condition  and  with 
weight  diminished.     For  transportation  to  distant  countries 
meat  had  to  be  preserved  by  pickling  in  brine.     Fresh  meat 
of  good  quality  was  a  luxury,  and  the  average  consumption  of 
meat  was  small.     Modern  progress  has  solved  the  problem  of 
using  the  great  grazing  spaces  of  North  and  South  America, 
and  Australia  for  the  supply  of  distant  peoples,  in  two  ways. 
Improvements  in  transportation  by  land  and  sea  have  allowed 
the  carriage  of  live-stock  for  thousands  of  miles,  in  good  con- 
dition.   The  use  of  refrigerating  appliances,  especially  artificial 
refrigeration  by  means  of  steam  power,  has  permitted  the 
carriage  of  dead  meat  the  same  distance  without  deterioration. 
Furthermore,   the  application   of  scientific  principles  to  the 
preservation  of  meat  has  enabled  supplies  of  that  article  to 
be  utilized  which  would  otherwise  be  wasted,  and  has  contrib- 
uted a  new  form  of  ware  to  modern  trade.     Other  foodstuffs 
ffpiit.  sffld  fresh  vegetables)  have  profited  by  similar  advances 
in  the  means  of  transportation  and  preservation. 

380.  The  textiles ;  changes  in  relative  importance.  —  In  this 
brief  survey  only  two  more  classes  of  wares  may  be  noted,  the 
textiles,  and  colonial  products.    Trade  in  wares  of  both  these 
classes  has  undergone  a  great  development  and  important 


THE  WARES  OF  COMMERCE  323 

transformation  in  the  course  of  the  century,  though  it  presents 
no  such  revolutionary  changes  as  in  the  case  of  wares  described 
above. 

The  textiles  have  continued  to  be  among  the  most  important 
wares  of  commerce.  A  population,  advancing  rapidly  not  only 
in  numbers  but  in  average  purchasing  power,  has  demanded 
constantly  increasing  supplies  of  clothing  material.  There  has 
been,  however,  a  noteworthy  change  in  the  kind  of  fabric 
demanded.  Measuring  by  the  weight  of  the  raw  material 
consumed,  the  English  textiles  about  1800  were  composed  as 
follows:  over  two  fifths  woolen,  over  two  fifths  linen,  consid- 
erably less  than  one  fifth  cotton.  Note  now  the  change  as 
shown  by  conditions  about  1880:  wool  made  up  one  fifth  of 
the  total,  linen  little  more  than  one  tenth,  while  cotton  had 
risen  to  two  thirds.  For  some  purposes  cotton  fabrics  are 
better  than  those  of  any  other  material,  for  other  purposes 
they  present  a  cheap  and  satisfactory  substitute;  and  conse- 
quently they  have  been  able  to  displace  other  textiles  to  a 
large  extent. 

381.  Commerce  in  raw  materials  for  the  textile  manufac- 
ture. —  The  rise  in  importance  of  cotton  is  partly,  not  entirely, 
responsible  for  a  great  change  in  the  character  of  the  textile 
trade.  With  the  exception  of  silk,  which  has  always,  because 
of  its  high  price,  been  of  restricted  use,  the  raw  materials  for 
the  textiles  had  formerly  been  produced  in  the  country  of 
manufacture.  England  and  the  Netherlands,  it  is  true,  had 
begun  before  1800  to  import  wool  from  Spain,  but  wool  was 
then  an  object  of  internal  rather  than  foreign  trade,  in  general, 
and  flax  was  raised  for  home  consumption  in  practically  all 
the  European  countries.  The  introduction  of  the  cotton  manu- 
facture in  Europe  introduced  a  change,  for  in  the  case  of  this 
textile  the  raw  material  as  well  as  the  finished  product  was 
necessarily  a  ware  of  foreign  trade.  The  past  century  has 
witnessed  a  vast  increase  in  the  commerce  in  raw  cotton,  and, 
moreover,  the  establishment  of  an  important  trade  in  raw 
wool.  In  1850  Europe  still  supplied  four  fifths  of  the  wool 


324  A  HISTORY  OF  COMMERCE 

consumed,  and  has  continued  since  that  date  to  produce  about 
the  same  quantity  as  then.  The  proportion  which  it  contributes 
to  the  total  supply  has,  however,  declined  to  less  than  one 
third.  There  has  been  an  immense  increase  in  the  production 
of  wool  in  South  America  and  Australia,  and  a  less  notable 
advance  in  the  amounts  furnished  by  Africa  and  Asia.  At  the 
present  time,  therefore,  raw  wool  flows  to  Europe  from  all  the 
other  continents,  and  returns  to  them  in  the  form  of  finished 
goods. 

382.  Colonial  products.  —  The  last  class  of  wares  to  engage 
our  attention  will  be  that  of  the  so-called  colonial  products, 
of  which  tea,  coffee,  and  sugar  are  familiar  examples.  The 
wares  received  their  name  because,  before  1800,  Europe  de- 
pended entirely  on  distant  parts  of  the  world  for  their  supply. 
The  reader  will  remember  what  an  important  part  they  played 
in  the  commerce  of  countries  like  England  and  France,  in  the 
modern  period. 

At  least  one  ware  of  considerable  commercial  importance 
has  been  added  to  the  list  of  colonial  products  in  the  course 
of  the  century.  Rubber  (using  that  word  to  cover  also  gutta- 
percha,  an  article  with  somewhat  different  qualities),  counted 
for  little  in  commerce  before  1830.  Soon  after  that  time, 
however,  it  was  regarded  as  "promising,"  and  the  discovery 
of  the  vulcanizing  process  by  Goodyear  enabled  manufacturers 
to  gain  the  full  benefit  of  its  valuable  qualities,  elasticity, 
impermeability,  etc.  It  is  now  an  indispensable  article  in. 
many  applications,  and  though  the  production  has  risen  to  a 
hundred  million  pounds  a  year  the  demand  for  it  has  increased 
still  more  rapidly,  and  the  price  has  risen. 

The  old  wares  have  not  only  retained  but  also  increased 
their  importance  as  elements  in  human  consumption.  The 
people  of  Germany  consumed,  on  an  individual  average,  about 
2  pounds  of  coffee  in  1840,  6  pounds  in  1900;  4  pounds  of 
sugar  in  1840,  30  pounds  in  1900.  Figures  from  other  coun- 
tries present,  with  some  variations,  the  same  growth  in  de- 
mand. The  people  of  the  United  States  now  demand  over 


THE   WARES   OF  COMMERCE  325 

10    pounds    of    coffee    per    capita,    and    over    70    pounds    of 
sugar. 

383.  Rise  of  beet  sugar,  and  effect  on  commerce.  —  One  of 
the  colonial  wares,  sugar,   demands  special   attention.     The 
methods  of  productionEave  undergone  a  complete  change  in 
the  course  of  the  century,  and  the  former  currents  of  trade  in 
sugar  have,  in  some  cases,   actually   been  reversed.     Before 
1800  people  relied  entirely  for  their  sugar  supply  on  the  cane 
plantations  of  the  colonies.     It  was  known  already,  however, 
that  beets  contained  a  large  percentage  of  sugar,  and  during 
the  Napoleonic  wars,  when  the  Continent  was  closed  in  large 
part  to  colonial  imports,  an  attempt  was  made  to  secure  sugar 
from  this  native  source  of  supply.    The  attempt  was  sufficiently 
successful  to  stimulate  further  efforts.    With  the  aid  of  liberal 
protection  from  the  governments  a  beet  sugar  industry  was 
established  on  the  Continent  in  the  first  half  of  the  century. 
That  industry  supplied  in  1860  one  quarter  of  the  total  amount 
of  the  sugar  of  the  world,  in  1882  one  half,  in  1900  nearly  two 
thirds. 

The  change  in  the  method  of  manufacturing  sugar  has  had 
far-reaching  effects  on  commerce.  Countries  with  cane  plan- 
tations have  seen  the  price  of  sugar  fall  under  the  increased 
output  of  European  factories,  equipped  and  operated  with 
scientific  accuracy;  they  have  lost  a  large  part  of  their  former 
market;  some  of  them  have  been  almost  ruined.  England, 
which  once  made  great  profit  by  importing  cane  sugar  and 
distributing  it  among  the  other  European  countries,  now,  on 
the  contrary,  goes  to  the  Continent  for  the  larger  part  of  its 
sugar  supply;  and  continental  states  like  Germany  and  France 
export  sugar  instead  of  importing  it. 

384.  The  European  sugar  bounty  system.  —  The  reader 
should,  however,  note  carefully  that  these  changes  were  due 
in  large  part  to  a  system  of  protection  which  had  grown  to  for- 
midable proportions.     European  governments  have  found  in 
sugar  a  convenient  object  of  taxation,  but  have  desired  at  the 
same  time  to  further  the  growth  of  the  home  sugar  industry, 


326  A  HISTORY  OF  COMMERCE 

and  to  secure  for  it  a  market  in  foreign  countries.  They  have 
sought  to  combine  the  two  objects  by  taxing  the  home  con- 
sumer, and  by  remitting  the  tax  and  giving  special  premiums 
to  the  exporter.  A  pound  of  sugar  cost  far  more  in  a  country 
of  Europe  where  it  was  manufactured,  than  in  the  country  to 
which  it  was  exported;  every  pound  sold  at  home  had  to  bear  a 
tax,  and  every  pound  sent  abroad  received  a  premium  which 
enabled  it  to  be  sold  more  cheaply.  The  orange  marmalade 
industry,  for  which  the  town  of  Dundee  is  famous,  could  flourish 
in  spite  of  the  expense  of  transporting  the  fruit  from  Spain  to 
Scotland,  because  sugar  was  artificially  cheap  in  the  English 
market.  Such  a  condition  of  affairs  was  admitted  to  be  un- 
wholesome; in  some  aspects  it  became  absurd.  The  burden  of 
the  bounty  system  became  intolerable  and  the  governments  of 
the  Continent  agreed  upon  measures  of  reform,  which  went  into 
effect  in  1903. 

QUESTIONS  AND  TOPICS 

1.  Make  a  brief  written  summary  of  the  contents  of  preceding  chap- 
ters under  the  heads  of  section  371. 

2.  On  an  outline  map  of  Europe  indicate  areas  corresponding  to  the 
sphere  of  commerce  in  different  periods,  with  approximate  dates. 

3.  Suppression  of   the   slave   trade.     [Schuyler,   Amer.    diplomacy, 
N.  Y.,  1886,  chap.  5.] 

4.  Recent  slave  trade  in  Africa.    [Biography  of  a  modern  missionary 
or  explorer.] 

5.  The  coal  trade  at  the  close  of  the  century.     [Special  Consular 
Report,  No.  21,  1900,  part  1,  Foreign  markets  for  American  coal;   U.  S. 
Monthly  Summary  of  Commerce  and  Finance,  April,  1900,  vol  7,  no.  10, 
pp.  2815-2927,  or  Sept.,  1902,  vol.  10,  no.  3,  pp.  663-757.] 

6.  On  the  wares  of  375  and  the  following  sections  prepare  reports, 
indicating,  where  it  is  possible,  the  following  points:   total  amount  of  the 
world's  product;   the  leading  countries  (perhaps  six),  the  share  of  each, 
and  their  relative  advantages;   the  chief  importing  countries;   peculiar 
characteristics  of  the  trade.     [Commercial  geographies,  encyclopedias.] 

7.  Report  on  one  of  the  following  topics: 

(a)  Development  of  the  uses  of  petroleum. 

(6)  History  of  the  production  and  transportatiop  of  petroleum. 

(c)  The  Standard  Oil  Company. 


THE  WARES  OF  COMMERCE  327 

[Martin,  Coal;  encyclopedias;  Gilbert  H.  Montague,  The  rise  and 
progress  of  the  Standard  Oil  Company,  N.  Y.,  Harper,  1903,  $1;  Ida  M. 
Tarbell,  The  History  of  the  Standard  Oil  Company,  N.  Y.,  1904.] 

8.  Indicate  on  an  outline  map  the  distance  from  your  home  to  which 
wheat  could  profitably  be  carried  by  different  means  of  transportation. 
[See  below,  sect.  387,  for  convenient  statistics.] 

9.  Character  and  value  of  wheat.     [Edgar,  Story,  chaps,  1,  2.] 

10.  Explain  the  great  fluctuations  in  the  export  of  wheat  from  the 
U.  S.  in  the  nineteenth  century.     [See  statistics  in  U.  S.  Statistical  Ab- 
stract.] 

11.  Wheat  in  modern  commerce.    [Edgar,  Story,  chap.  4.] 

12.  Provision  trade  of  the  world.     [U.  S.  Monthly  Summary,  Feb., 
1900,  vol.  7,  no.  8.  pp.  2297-2347.] 

13.  American  canning  interests.      [Judge  in  Depew,  One  hundred 
years,  chap.  57.] 

14.  What  amount  does  an  American  household,  your  own  for  instance, 
spend  in  a  year  for  each  of  the  chief  textiles:   cotton,  wool,  linen,  silk? 

15.  The  cotton  trade  of  the  United  States  and  of  the  world.     [See 
above,  sect.  378,  for  suggestion  of  a  simple  mode  of  treating  a  large  sub- 
ject; the  topic  may  be  amplified  as  time  permits.     F.  Wilkinson,  Story  of 
cotton,  N.  Y.,  Appleton,  $1;    S.  J.  Chapman,  The  cotton  industry,  Lon- 
don, 1905;    George  Bigwood,  Cotton,  London,  1918;    statistics  in  U.  S. 
Monthly  Summary,  vol.  7,  no.  9,  pp.  2543-2635.] 

16.  The  wool  trade.    [John  H.  Clapham,  The  woolen  industries,  Lon- 
don, 1907;  Frank  Ormerod,  Wool,  London,  1918.] 

17.  Write  a  history  of  one  of  the  following,  as  a  ware  of  commerce  in 
the  nineteenth  century:  rubber,  tea,  coffee. 

18.  History  of  sugar  as  a  commodity.     [See  the  doctor's  dissertation 
by  Ellen  D.  Ellis,  Philadelphia,  1905.] 

19.  What  amount  of  tea,  coffee,  and  sugar  does  your  household  con- 
sume in  a  year?     (Note  that  sugar  is  frequently  purchased  in  preserves, 
cake,  etc.) 

20.  History  of  beet  sugar,  [Encyclopedias;  index  to  periodical  litera- 
ture; U.  S.  Monthly  Summary,  Jan.,  1902,  vol.  9,  no.  7,  pp.  2585-2763.] 

21.  Some  effects  of  the  system  of  sugar  bounties.    [Charles  S.  Parker, 
Free  trade  and  cheap  sugar,  Fortnightly  Review,  1898,  70:    44-53.] 

22.  The  Brussels  sugar  conference.     [Economic  Journal,  June,  1902, 
12:  217  ff. ;  same,  March,  1904,  14:  34  ff. ;  Quarterly  Journal  of  Economics, 
Nov.,  1902,  17:    Iff.,  Contemporary  Review,  Jan.,  1903,  83:75.] 

BIBLIOGRAPHY 

As  this  chapter  touches  the  field  of  commercial  geography  I  refer, 
for  bibliography  and  general  reading,  to  the  current  manuals  on  that 


328  A  HISTORY  OF  COMMERCE 

subject:  C.  C.  Adams,  Text-book,  N.  Y.,  Appleton;  G.  S.  Chisholm, 
Handbook,  N.  Y.,  Longmans;  Joseph  Russell  Smith,  Industrial  and 
commercial  geography,  N.  Y.,  Holt. 

References  in  quantity  sufficient  for  ordinary  students  are  given  in 
the  Questions  and  Topics  above;  further  references  will  be  given  when 
the  history  of  the  commerce  of  specific  countries  is  considered. 


CHAPTER  XXXIII 
THE  MODERN   ORGANIZATION 

385.  Qualities  of  modern  commerce.  Certainty.  —  The 
changes  in  the  instruments  and  objects  of  commerce,  described 
in  preceding  chapters,  have  had  far-reaching  effects  on  com- 
mercial methods  and  organization,  to  which  the  reader  is  now 
asked  to  give  his  attention.  As  a  partial  summary  of  what 
has  gone  before,  and  a  preparation  for  what  is  to  follow,  modern 
commerce  may  be  said  to  have  made  great  gains  in  four  im- 
portant qualities:  certainty,  regularity,  economy,  sensitiveness. 

In  former  times  a  merchant  who  gave  an  order  involving 
the  transportation  of  goods  over  considerable  distances  took^ 
a  leap  in  the  dark.  He  was  fortunate  if  he  could  estimate 
with  some  accuracy  the  expense  of  transportation;  he  was 
almost  helpless  in  estimating  the  time  that  would  be  con- 
sumed. So  dependent  were  men  on  wind  and  weather,  heat 
and  cold,  war  and  peace,  and  all  the  manifold  conditions  of 
nature  and  man,  that  loss  was  frequent  and  delay  was  con- 
stant. The  element  of  chance,  great  by  nature,  was  heightened 
by  man;  carriers  were  emboldened  to  make  the  most  of  their 
opportunities  and  to  extort  from  the  merchant  all  that  the 
difficulties  of  his  position  might  force  him  to  pay. 

Contrast  these  conditions,  as  they  existed  in  the  period 
before  1800,  with  conditions  at  the  present  time.  The  modern 
system  of  transportation  has  been  likened  to  clockwork.  The 
modern  merchant  feels  aggrieved  if  a  telegram  is  delayed  a 
few  minutes,  a  train  a  few  hours,  a  steamer  a  few  days.  His 
expectations,  indeed,  are  seldom  disappointed,  and  even  then 
he  is  often  informed  of  the  probable  duration  of  the  delay, 
and  is  enabled  to  prepare  for  it.  'The  rates  of  transportation 

329 


330  A   HISTORY  OF  COMMERCE 

now  are  relatively  stable,  and,  for  the  most  part,  are  a  matter 
of  public  knowledge.  We  have  not  yet  reached  perfection  in 
this  respect,  as  is  shown  by  the  wide-spread  complaints  against 
American  railroad  managers,  but  we  have  approached  nearer 
to  it  than  would  have  been  imagined  possible  a  century  ago. 

386.  jPrrpihpty  ~    Certainty    brings    with    it    regularity. 
Steamers  which  are  sure  to  arrive  within  a  certain  period  can 
be  advertised  to  leave  on  certain  days.     Merchants  and  pro- 
ducers are  encouraged  to  make  their  preparations,  and  the 
whole  body  of  people  is  stimulated  to  new  activity  and  effi- 
ciency.     Consider    the    following    example,    which,    however 
trivial  in  itself,  is  typical  of  the  course  of  development  in  the 
nineteenth   century.      "  Before   the   establishment   of   steam- 
vessels,  the  market  at  Cork  was  most  irregularly  supplied  with 
eggs  from  the  surrounding  district;    at  certain  seasons  they 
were  exceedingly  abundant  and  cheap,  but  these  'seasons  were 
sure  to  be  followed  by  periods  of  scarcity  and  high  prices,  and 
at  times  it  is  said  to  have  been  difficult  to  purchase  eggs  at 
any  price  in  the  market.    At  the  first  opening  of  the  improved 
channel  of  conveyance  to  England  (the  steamer),  the  residents 
of  Cork  had  to  complain  of  the  constant  high  price  of  this  and 
other  articles  of  farm  produce;  but  as  a  more  extensive  market 
was  now  permanently  open  to  them,  the  farmers  gave  their 
attention  to  the  rearing  and  keeping  of  poultry,  and,  at  the 
present  time  (1838),  eggs  are  procurable  at  all  seasons  in  the 
market  at  Cork,  not,  it  is  true,  at  the  extremely  low  rate  at 
which  they  could  formerly  be  sometimes  bought,  but  still  at 
much  less  than  the  average  price  of  the  year.    A  like  result  has 
followed  the  introduction  of  this  great  improvement  in  regard 
to  the  supply  and  cost  of  various  other  articles  of  produce." 

387.  Frjinnmyi       A-  to  the  economy  in  the  carriage  of 
wares  resulting  from  recent  improvements  much  has  already 
been  said  in  other  chapters,  but  the  student  may  find  in  the 
following  estimate,  by  a  German  author,  a  helpful  summary. 
For  $3  a  hundred  kilogram^  of  wheat  (220  pounds,  a  little 
less  than  4  bushels)  could  be  carried  the  following  distances 


THE  MODERN  ORGANIZATION  331 

in  kilometers  (about  five  eights  of  a  mile) :  on  a  common  road 
100,  on  a  good  road  400,  on  an  early  railroad  1,500,  on  a  modern 
railroad  4,500,  on  an  ocean  steamer  25,000.  There  is  little 
danger  that  the  student  will  underestimate  the  advantage  to 
commerce  of  this  reduction  in  the  cost  of  carriage,  but  he  should 
note  also  the  economy  resulting  from  the  speed  and  certainty 
of  modern  instruments  of  transportation.  A  considerable  part 
of  the  world's  capital,  a  century  ago,  was  locked  up  in  goods 
in  transit  or  in  warehouse.  These  goods  were  of  no  use  to 
anybody.  Nowadays  not  only  are  goods  put  where  they  are 
wanted,  they  are  put  there  with  such  speed  and  certainty  that 
merchants  do  not  need  to  keep  a  large  stock  on  hand,  and  the 
stock  in  transit  is  relatively  small.  In  the  India  trade,  for 
instance,  when  a  voyage  around  the  Cape  of  Good  Hope  took 
a  good  part  of  a  year,  and  the  time  of  arrival  could  not  be 
calculated  within  a  month  or  two,  India  merchants  had  to 
keep  great  stocks  to  meet  the  varying  demand.  Now  that 
steamers  make  the  trip  by  the  Suez  Canal  in  a  month,  and 
the  time  of  their  arrival  is  exact  to  a  day,  dealers  order  goods 
as  they  are  needed,  and  the  great  India  warehouses  have  been 
rendered  in  large  part  useless  for  their  original  purpose. 

388.  Sensitiveness.  —  The  modern  commercial  organization 
has  been  likened  to  clock  work,  because  of  its  regularity. 
Carrying  further  this  comparison,  it  may  be  said  that  it  is 
like  a  delicate  chronometer,  in  which  every  movement  is 
attended  with  the  minimum  of  friction.  The  power  of  modern 
commerce  appears  in  the  vast  quantities  of  wares  which  are 
exchanged  through  its  agency;  its  sensitiveness  is  shown  by 
the  readiness  with  which  the  currents  of  trade  are  turned  or 
even  reversed  to  suit  the  occasion.  It  has  been  said  that 
commerce  turns  from  one  side  of  the  globe  to  the  other  on  a 
difference  of  a  cent  on  a  bushel  of  grain,  a  dollar  on  a  ton  of 
metal,  a  quarter  of  a  cent  a  yard  on  a  textile  fabric,  or  a  six- 
teenth of  a  cent  on  a  pound  of  sugar.  So  sensitive  has  the 
commercial  world  become  to  every  stimulus  that  it  feels  also 
every  shock.  When  the  McKinley  tariff  bill  was  passed  in 


332  A  HISTORY  OF  COMMERCE 

the  United  States,  it  is  said  that  the  next  day  several  thousand 
workmen,  employed  in  the  manufacture  of  pearl  buttons  in  a 
city  of  far-off  Austria,  were  thrown  out  of  work.  Brief  inter- 
ruptions of  commerce,  by  the  outbreak  of  epidemic  diseases, 
by  storms  or  other  natural  phenomena,  or  by  strikes  of  workers 
engaged  in  transportation,  rouse  serious  anxiety.  The  sen- 
sitiveness of  modern  commerce  may  be  shown,  further,  by  the 
refinements  to  which  the  principle  of  the  division  of  labor  has 
been  carried.  It  is  said  that  in  the  leather  manufacture  skins 
are  sometimes  sent  across  the  ocean  four  times,  to  effect 
economies  in  subordinate  treatments. 

389.  Importance  of  the  telegraph,  illustrated  by  conditions 
preceding  its  introduction.  —  While  the  various  changes  in 
commerce  indicated  above  can  be  ascribed  largely  to  the  use 
of  steam  in  transportation,  they  would  be  inconceivable,  in_ 
their  present  form,  if  the  electric  telegraph  had  not  been 
extended  over  all  lands  and  under  all  seas. 

"••••••••••••••••^^•(•^•••^••i 

The  importance  of  the  telegraph  in  commerce  can  be  illus- 
trated by  conditions  in  Shanghai  about  1870,  before  the  cable 
reached  that  port.  The  rate  of  foreign  exchange,  a  decisive 
factor  in  all  commercial  calculations,  was  at  that  time  deter- 
mined by  European  advices  brought  by  post  steamers.  The 
news  brought  by  one  steamer  would  make  the  Chinese  tael 
equivalent  to  7.25  francs;  on  the  arrival  of  another  steamer 
the  rate  would  rise  to  8.10.  As  merchants  bought  in  taels 
and  sold  in  francs  or  other  European  currency,  their  profits 
and  losses  were  largely  dependent  on  variations  in  the  rate. 
Two  mercantile  houses  of  Shanghai  had  found  it  worth  their 
while  to  invest  a  large  sum  in  the  construction  of  special 
vessels,  which  could  be  made  like  modern  torpedo  boats, 
practically  all  machinery  and  hence  very  fast,  as  the  only 
cargo  they  had  to  carry  was  a  single  letter,  bringing  from 
Singapore  or  Hong-Kong  the  European  news  affecting  the 
rate  of  exchange,  many  hours  in  advance  of  the  regular  steamer. 
The  few  merchants  who  enjoyed  the  benefit  of  this  news 
service  had,  of  course,  a  great  advantage  over  their  competitors, 


THE  MODERN  ORGANIZATION  333 

buying  and  selling  with  full  knowledge  of  what  the  rate  would 
be.  With  the  introduction  of  the  cable,  however,  all  mer- 
chants shared  alike  in  such  information,  and,  furthermore,  by 
the  continuous  communication  thus  established,  the  former 
violent  Quotations  in  rates  became  a  thing  of  the  past. 

390.  Services  of  the  telegraph  to  the  modern  organization.  — 
Newspapers  spread  broadcast  the  market  quotations  which  are 
carried  by  the  telegraph  to  all  parts  of  the  world,  and  the 
farmer  in  the  American  West,  the  cotton  grower  in  the  South, 
"oF"the  sheep  raiser  in  Australia,  can  learn  with  ease  what 
prices  his  staple  brings  in  the  great  markets  and  what  price 
he  can  ask  for  it.  At  the  centers  of  business  the  great  mer- 
chants, in  touch,  by  the  post  and  telegraph,  with  both  con- 
sumers and  producers,  study  to  apportion  the  supply  so  that 
it  will  reach  those  who  stand  most  in  need  of  it,  and  seek  to 
regulate  future  production  so  that  there  may  be  neither  waste 
nor  want  when  the  product  is  brought  to  market.  The  re- 
markable progress  of  3razil  in  coffee  production  has  been 
explained  by  a  student  of  the  subject  as  due  in  large  part  to 
the  spread  of  the  telegraph  in  South  America  and  the  laying  of 
a  cable  to  Pernambuco  in  1874,  bringing  the  country  into 
communication  with  the  world's  coffee  markets. 

The  telegraph  has,  moreover,  enabled  commerce  to  dispensa 
with  a  whole  army  of  middlemen,  commission  merchants,  and 
brokers,  who  were  necessary  under  the  old  system,  but  who 
have  now  been  released  to  find  more  useful  employments. 
Merchants  in  the  wool  trade,  for  example,  send  their  buyers 
to  the  countries  of  production  on  fast  steamers,  transmit  their 
instructions  by  telegraph,  and  bring  the  wool  directly  to  the 
country  of  consumption,  cutting  out  entirely  the  middlemen 
of  London,  Antwerp,  and  Havre,  who  once  controlled  the  trade. 
Before  the  first  Atlantic  cable  was  laid  it  cost  about  3  per  cent 
to  get  cotton  through  the  hands  of  the  commission  merchant 
and  broker;  the  cable  did  away  with  the  old  consignment 
system,  and  in  a  dozen  years  the  charge  was  reduced  to  about 
1  per  cent. 


334  A  HISTORY  OF  COMMERCE 

391.  Functions  of  the  merchant.  —  I  spoke  above  of  the 
elimination  of  unnecessary  middlemen.     To  many  people  all 
middlemen  seem  unnecessary,   and  fit  only  for   elimination. 
These  people  regard  as  worthless  drones  all  who  are  not  en- 
gaged in  the  work  of  raising  raw  materials,  of  manufactures, 
or  of  transportation;  they  see  no  reason  why  a  man  who  merely 
sits  in  an  office,  receives  reports  and  writes  letters,  who  perhaps 
rarely  sees  the  wares  he  "handles, "  should  grow  rich  off  society. 

The  defence  of  the  middleman  may  be  given  in  the  words 
of  an  English  writer,  describing  the  important  part  which 
merchants  play  in  marketing  the  great  output  of  the  British,. 
iron  industry.  "The  merchant  usually  has  a  better  knowledge 
of  the  conditions  affecting  different  markets  than  the  producer. 
He  comes  more  directly  in  contact  with  the  buyer;  he  knows 
better  to  whom  credit  can  safely  be  given,  and  is  prepared  to 
risk  credits  that  the  manufacturer  would  often  refuse;  he  is 
well  posted  in  railway  and  shipping  rates  and  conditions, 
understands  the  peculiarities,  practices,  and  requirements  of 
particular  markets,  and  has  all  other  necessary  commercial 
information,  including  freights  and  tariff  duties,  at  his  fingers' 
ends."  Surely  the  functions  thus  suggested  are  sufficiently 
important  to  keep  specialists  employed,  with  profit  to  society 
as  well  as  to  the  individuals  engaged. 

392.  Growth  in  number  and  variety  of  the  mercantile  class. 
• —  In  fact,  the  class  of  middlemen,  those  who  are  occupied 
merely  in  the  exchange  of  wares,  has  increased  greatly  in  the 
course  of  the  century.     The  great  commercial  machine  runs 
now  with  such  power  and  smoothness,  only  by  the  help  of 
myriads  of  men  who  get  their  livelihood  by  tending  it.     In 
Prussia,  for  example,  the  number  of  wholesale  merchants  or 
firms  increased  twenty-fold  in  sixty  years. 

The  change  would  lack  a  large  part  of  its  present  signifi- 
cance if  it  affected  only  the  number  of  middlemen.  It  has 
been  a  change  in  quality  as  well  as  quantity.  The  increase  in 
business  has  furnished  the  opportunity  for  a  redistribution  of 
tasks,  and  has  led  to  a  specialization  which  was  before  imprac- 


THE  MODERN  ORGANIZATION  335 

ticable.  To  be  a  jack  of  all  trades  nowadays  one  must  be  a 
man  of  supreme  genius;  to  be  master  of  one  branch  of  trade 
is  sufficient  for  the  energy  and  the  ambitions  of  the  ordinary 
man.  It  pays  a  iV\v  men  to  take  the  position  of  Charles  Broad- 
way Rouse,  to  of'iVr  to  buy  anything  and  to  sell  everything. 
Most  wholesale  merchants  are  content  to  confine  themselves 
to  one  branch  of  trade:  lumber,  iron,  wool,  leather,  grain,  etc. 
Most  of  these  merchants,  moreover,  rely  further  on  specialists 
to  help  them  with  certain  parts  of  their  business.  They  depend 
constantly  on  the  banker,  the  speculator,  the  broker,  the  for- 
warder, the  warehouseman,  the  commission  merchant,  and 
agents  of  many  different  kinds.  It  is  impossible,  in  this  book, 
to  do  more  than  suggest  the  complex  commercial  organization 
which  has  grown  up  in  the  course  of  the  century.  Only  a  few 
of  the  most  prominent  features  can  be  treated  in  the  following 
sections. 

393.  Insurance  and  speculation,  — The  practice  of  insur-, 
ance  has  made  us  familiar  wren  me  means  by  which  producers 
secure  themselves  against  some  of  the  risks  of  their  business. 
A  farmer  can  insure  his  growing  crop  against  hail,  a  merchant 
can  insure  his  stock  against  loss  by  fire,  a  shipowner  can  insure 
his  vessel  against  loss  at  sea.  For  a  small  annual  payment, 
which  the  producer  can  well  spare,  he  secures  himself  against 
a  loss  which  might  prove  ruinous,  if  it  chanced  to  come  to 
him.  He  gains  relief  from  anxiety,  strengthens  his  credit  (he 
could  not  borrow  on  the  security  of  uninsured  goods),  and 
secures  that  regularity  of  operation  which  is  essential  to  the 
greatest  efficiency. 

So  obvious  are  the  advantages  of  insurance  that  every  one 
accepts  it  as  a  benefit.  We  have  now  to  see  how  the  same 
service  which  is  performed  for  the  producer  by  the  insurance 
company  is  performed  for  the  merchant  by  the  speculator. 
Among  the  greatest  risks  in  commerce  is  that  of  price  changes 
due  to  great  events  (wet  seasons  or  dry  seasons,  war  or  peace, 
etc.)  which  the  merchant  can  neither  control  nor  foresee.  A 
grain  merchant,  for  instance,  who  has  bought  some  excellent 


336  A  HISTORY  OF  COMMERCE 

wheat  in  Dakota,  has  made  advantageous  arrangements  for 
its  transportation,  and  is  confident  of  finding  a  ready  sale  to 
an  English  miller,  may  find  the  whole  transaction  results  not 
in  profit  but  in  loss,  if  the  level  of  wheat  prices  falls  before 
his  sale  is  accomplished,  by  reason,  perhaps,  of  the  unexpected 
yield  of  wheat  in  a  distant  country,  or  by  the  conclusion  of  a 
great  war.  Why  does  he  not  sell  the  wheat  in  advance  to  the 
miller,  and  so  protect  himself  from  this  danger?  He  would 
simply  be  shifting  the  burden  to  shoulders  still  less  able  to 
bear  it.  The  miller  is  a  manufacturer,  who  needs  to  give  all 
his  thought  to  the  technical  details  of  his  business,  and  who 
can  ill  afford  to  buy  wheat  when  it  is  high,  only  to  find  when 
he  comes  to  market  the  flour  that  it  has  dropped  in  price,  in 
sympathy  with  a  decline  in  wheat. 

394.  Services  of  the  speculator  to  commerce.  —  The  class 
of  speculators  has  grown  up  in  the  course  of  the  century,  to 
assume  such  risks.  It  can  do  great  harm  to  business  by  creat- 
ing risks  where  none  naturally  existed,  producing  artificial 
scarcity  by  "corners,"  etc.;  this  danger  should  not  blind  us 
to  the  benefits  it  confers  when  it  confines  itself  to  its  legitimate 
business.  Let  us  see  how,  in  practice,  this  business  of  specu- 
lation serves  commerce. 

A  merchant  who  has  bought  wheat  or  cotton  in  America, 
for  sale  in  the  Liverpool  market,  sells  immediately  an  equal 
quantity  for  future  delivery,  at  a  time  when  he  expects  to 
have  his  ware  ready  for  sale  in  England.  It  makes  no  differ- 
ence to  him  then  whether  the  general  price  of  his  ware  goes 
up  or  down.  If  prices  go  up  he  will  have  to  pay  more  to 
"cover"  his  sale  of  futures,  but  he  will  also  get  more  for  his 
real  ware.  If  prices  go  down  he  may  not  be  able  to  get  as  much 
for  his  real  wheat  or  cotton  as  he  expected,  possibly  not  as 
much  as  he  paid  for  it;  but  he  will  make  up  just  the  difference, 
by  the  low  price  at  which  he  can  cover.  He  renounces  all 
chance  at  great  gains,  but  also  secures  himself  against  great 
loss,  and  is  glad  to  pay  the  speculator's  commission  to  attain 
this  result.  He  makes  his  profit  by  the  differences  in  the  price 


THE  MODERN  ORGANIZATION  337 

of  wheat  or  cotton  not  at  different  times,  but  in  different 
places;  reference  to  the  section  above,  in  which  the  description 
of  the  modern  merchant  was  quoted,  will  suggest  how  he  earns 
his  living.  In  a  manner  similar  to  this  many  manufacturers 
(millers  or  cotton  manufacturers)  protect  themselves  against 
variations  in  the  price  of  their  raw  material. 

395.  Decline  of  the  market  and  fair,  and  rise  of  the  produce 
exchange.  —  I  spoke  above  of  the  regularity  of  modern  com- 
merce as  one  of  its  distinctive  features.  The  gain  in  regularity 
shows  itself  notably  in  institutions  like  the  market,  the  fair, 
and  the  exchange.  The  old  system  of  market-days,  under 
which  country  people  came  to  town  on  stated  days  to  display 
their  wares  and  enable  housewives  to  lay  in  a  supply  of  pro- 
visions, has  given  place  to  a  steady  flow  of  products  through 
city  shops  and  market  halls  to  the  consumers.  Fairs  have 
lost  their  significance  in  modern  countries,  because  the  volume 
of  trade  is  now  so  great,  and  the  instruments  of  trade  are  so 
highly  developed,  that  commerce  has  developed  into  one  per- 
manent fair.  The  great  expositions,  which  began  toward  the 
close  of  the  eighteenth  century,  but  of  which  the  London 
Exposition  of  1851  (Crystal  Palace)  was  the  first  of  world-wide 
significance,  seem  to  have  continued  to  the  present  time  the 
principle  of  periodical  recurrence,  but  a  tendency  to  perma- 
nence is  to  be  noted  even  with  respect  to  them.  Many  of 
these  expositions  have  led  to  the  establishment  of  museums  of 
industry,  art,  and  commerce,  and  the  use  of  permanent  expo- 
sitions of  models  and  samples  has  come  to  be  a  recognized 
means  of  furthering  industry  and  commerce.  Finally,  the 
nineteenth  century  has  witnessed  the  foundation  of  most  of 
the  modern  produce  exchanges,  which  have  proved  indispen- 
sable to  the  rapid  development  of  commerce  in  the  great 
staples.  The  experience  of  Hamburg  is  significant  in  this 
respect.  The  coffee  trade  of  that  port  declined  after  1882, 
when  Havre  adopted  the  system  of  dealings  in  futures,  and 
did  not  recover  until  1887,  when  Hamburg  adopted  the  system 
also,  and  then  enjoyed  a  rapid  growth  of  the  trade.  These 


338  A   HISTORY  OF   COMMERCE 

produce  exchanges  are  to  be  found,  with  variations  in  the 
wares  handled  and  in  the  system  pursued,  in  all  advanced 
countries.  Germany,  for  instance,  offers  facilities  for  the 
characteristic  trade  of  a  produce  exchange  (including  dealings 
in  futures),  in  the  following  articles:  wheat,  rye,  maize,  oats, 
rye  flour,  crude  alcohol,  rape-seed  oil,  kerosene,  cotton,  coffee, 
raw  sugar,  granulated  sugar,  and  carded  wool. 

396.  Contrast  of  the  character  of  association  in  commerce 
and  in  manufactures  or  transportation.  —  A  previous  section, 
describing  the  specialization  of  merchants  in  the  nineteenth 
century,  suggests  the  gain  which  commerce  has  made  in  the 
way  of  cooperation.     The  tendency,   however,   has  been  to 
split  tasks  up  into  small  pieces,  and  to  distribute  these  among 
individuals  or  small  groups,   rather  than  to  associate  great 
numbers  of  men  under  one  management.     We  do  not  find  in 
strictly  commercial  undertakings  the  tremendous  aggregations 
of  men  and  capital  which  have  become  characteristic  of  modern 
transportation  and  manufactures.     Modern  trusts,  it  is  true, 
have  invaded  the  field  of  commerce  to  a  certain  extent,  and 
have  effected  some  of  their  chief  economies  in  improved  methods 
of  marketing  their  products.    What  the  development  may  be 
along  the  line  thus  indicated  is  an  interesting  subject  for 
speculation,  but  a  subject  which  cannot  be  allowed  to  detain 
us  here.     Mercantile  enterprises  are  still,  for  the  most  part, 
carried  on  by  individuals,  by  partnerships,  or  by  corporations 
in  which  the  personal  and  local  element  is  predominant. 

397.  More  efficient  utilization  of  capital  in  modern  trade.  — 
The  middleman,  therefore,  cannot  as  a  rule  secure  the  capital 
which  he  needs  for  carrying  on  his  business  by  offering  securities 
for  public  subscription  through  the  stock  exchange.    He  seems, 
in  this  respect,   at  a  disadvantage-  in  comparison  with  the 
manufacturer,  the  railroad,  or  the  steamship  operator.     He  is, 
however,  better  off  in  at  least  two  respects  than  his  predeces- 
sors of  an  earlier  time.    First,  he  can  do  much  more  business 
with  the  same  amount  of  capital  than  was  possible  under  the 
old  conditions.     The  great  technical  improvements  have  re- 


THE  MODERN  ORGANIZATION  339 

suited  in  a  much  more  rapid  "turn-over"  of  capital,  and  a 
merchant  now  sells  out  and  replenishes  his  stock  far  more 
rapidly  than  he  could  formerly  do.  The  instance  of  the  India 
trade,  given  in  a  section  above,  illustrates  this  fact.  The 
"merchant  princes"  who  once  ruled  this  trade  by  their  great 
capital  have  given  place  to  many  smaller  merchants,  who  can 
make  less  capital  suffice  by  its  rapid  turn-over. 

398.  Benefit  of  banks  to  trade.  —  Second,  the  deserving 
merchant  can  manage  with  a  smaller  capital  than  formerly, 
because  he  can  borrow  more  easily  and  to  much  better  advan- 
tage.    The  reader  must  be  content  with  a  summary  of  the 
results  of  the  development  of  banking  in  the  course  of  the 
century,  for  there  is  no  space  in  which  to  treat  the  details  of  its 
history.    Banks  have  followed  business  throughout  the  world. 
They  have  attracted  the  unused  capital  of  the  community 
until  they  control  now  a  fund  of  enormous  dimensions,  avail- 
able for  mercantile  loans.     On  the  security  of  business  paper 
(bills  of  exchange,  bills  of  lading,  drafts,  notes,  etc.),  merchants 
secure  the  use  of  this  capital,  and  find  their  means  limited 
now  only  by  the  extent  of  their  business.     It  is  the  function 
of  the  banker  to  judge  of  the  soundness  of  this  business,  and 
to  accord  or  withhold  the  use  of  the  bank's  money  accord- 
ing to  the  promise  of  the  enterprise.    Mistakes  are  made,  of 
course,  but  they  are  comparatively  rare  because  a  mistake  in 
either  direction  compromises  the  bank's  success.    Special  insti- 
tutions, the  commercial  and  credit  agencies,  have  grown  up 
since  1841,  to  aid  bankers  and  merchants  in  this  delicate  task 
of  judging  the  credit  of  Individuals. 

399.  Criticism  of  the  present  organization;  crises.  —  Of  the 
general  power  and  efficiency  of  the  present  organization  there 
can  be  no  question.    It  meets  the  supreme  test  of  maintaining 
a  population  greater  than  in  any  previous  period  of  the  world's 
history,  on  a  scale  of  comfort  formerly  unknown.     That  it  is 
perfect,  however,  no  sensible  man  believes.    We  cannot  discuss 
the  many  criticisms  directed  against  it  from  various  points  of 
view,  but  must,  not  omit  the  consideration  of  one  confessed 


340  A   HISTORY  OF  COMMERCE 

weakness.  The  organization  is  wonderfully  efficient  in  normal 
times,  but  it  is  unsteady.  It  passes,  at  intervals,  through 
periods  of  feverish  activity,  culminating  in  a  crisis  and  followed 
by  dull  stagnation.  A  curve  showing  the  course  of  the  world's 
trade  during  the  century  would  not  present  a  steady  rise,  but 
a  series  of  waves,  with  distinctly  marked  crest  and  trough. 
There  is  a  waste  of  labor  and  capital  in  all  periods  of  a  crisis. 
In  the  good  times  men  strain  themselves  to  build  railroads 
where  they  are  not  needed,  or  to  make  machines  for  which 
there  is  no  profitable  use.  Sooner  or  later  they  come  to  their 
senses  with  a  shock,  and  realize  that  they  have  been  wasting 
their  time;  then  they  are  as  depressed  as  they  formerly  were 
sanguine,  and  are  too  timid  for  a  time  to  make  good  use  of 
the  capital  which  the  crisis  has  left  on  their  hands. 

400.  Crises  before  1850. —  The  tendency  of  the  commercial 
organization  to  these  interruptions  in  its  regularity  of  opera- 
tion, which  was  apparent  in  advanced  countries  before  1800, 
has  grown  more  marked  in  the  nineteenth  century;   and,  with 
the  spread  of  the  modern  organization,  crises  now  affect  the 
whole  world.    Crises  have  occurred  at  intervals  of  about  eleven 
years  since  1800.    A  crisis  marked  the  end  of  the  Napoleonic 
wars  in  1815.    Another  followed  in  1825,  occasioned,  in  Eng- 
land, by  speculation  in  banks,  turnpikes,  and  canals,  and  by 
unwise  investments  in  South  America.     Commerce  recovered 
from  its  depression  only  to  decline  again  after  the  crisis  of 
1836-39,  which  was  felt  with  particular  severity  in  the  United 
States  in  1837.    The  last  of  the  crises  in  the  first  half  of  the 
century,  and  the  first  crisis  for  whick  railroad  speculation  can 
be  held  largely  responsible,  followed  in  1847,  and  was  the 
more  severe  on  the  Continent  because  it  coincided  with  a  period 
of  political  revolution. 

401.  Crises  since  1850.  —  Toward  the  middle  of  the  century 
the  new  instruments  of  steam  transportation  began  to  work 
their  great  changes.     At  just  this  time,  moreover,  the  dis- 
covery of  gold  in  California  (1848)  and  in  Australia  (1851)  led 
to  an  immense  increase  in  the  world's  stock  of  gold,  which  is 


THE  MODERN  ORGANIZATION  341 

said  to  have  doubled  in  little  more  than  ten  years.  The 
results,  inflation  and  speculation,  were  as  marked  as  though 
the  new  money  had  been  of  paper,  and  a  period  of  over-trading 
ceased  only  with  the  outbreak  of  the  crisis  of  1857,  which 
spread  quickly  from  the  United  States  to  England  and  thence 
to  the  Continent. 

A  longer  period  than  usual  intervened,  broken  only  by 
local  disturbances  (failure  of  a  great  English  banking  firm  in 
1866,  "Black  Friday"  in  the  United  States,  1869).  The  crisis 
of  1873  was,  perhaps,  on  this  account,  more  serious;  it  led  to 
a  depression  of  many  years,  affecting  all  branches  of  trade, 
and  even  distant  countries  like  Australia  and  South  America. 
Beginning,  this  time,  on  the  Continent,  where  the  outcome  of 
the  Franco-Prussian  war  and  the  payment  of  the  great  war 
indemnity  had  led  to  unprecedented  speculation,  it  found  a 
ready  field  in  the  United  States,  where  there  had  been  an 
active  speculation  in  land  and  stocks,  and  proved  to  be  the 
greatest  international  crisis  which  the  world  has  known.  As 
though  the  air  had  been  cleared  by  this  great  storm,  succeeding 
disturbances  have  been  far  more  restricted  in  their  action. 
A  banking  crisis  in  France  in  1882  and  a  railroad  crisis  in  the 
United  States  in  1884  were  the  chief  events  of  the  next  period 
of  danger;  and  in  more  recent  times  have  followed  the  American 
currency  crisis  of  1893,  and  the  German  industrial  crisis  of  1901. 

402.  Rise  in  the  price  level  since  1896.  — Toward  the  close 
of  the  nineteenth  century  a  change  became  apparent  in  the 
very  basis  of  business,  namely  in  the  world's  money  in  which 
prices  are  expressed.  The  prices  of  different  commodities 
never  rise  or  fall  exactly  in  unison,  but  it  is  possible  by  statis- 
tics to  show  the  change  in  the  average  of  prices  or  the  price 
level,  as  it  is  called;  and  a  study  of  recent  statistics  shows  a 
rise  in  prices  so  extensive  and  so  rapid  as  to  make  it  clearly 
a  topic  deserving  serious  attention  from  the  student  of  com- 
mercial development. 

Taking  for  the  basis  of  comparison  the  average  of  prices  in 
the  decade  1890-1899,  the  price  of  staple  raw  commodities  in 


342  A  HISTORY  OF  COMMERCE 

the  United  States  had  risen  in  1910  by  almost  40%;  or,  com- 
paring 1910  with  1896,  when  prices  were  lowest,  by  66.3  %, 
almost  two-thirds.  The  change  has  been  less  marked  in  manu- 
factured wares,  for  it  has  been  offset  to  a  certain  extent  by  im- 
provements in  methods  of  production,  but  still  it  is  very  great : 
nearly  30  %  compared  with  the  decade  before  1900,  and  over 
40  %  compared  with  1896. 

403.  Effects  of  increase  in  the  world's  gold  production.  — 
Countless  factors  have  contributed  to  this  result,  in  one  way  or 
another,  but  economists  are  generally  agreed  that  the  one  cause 
overshadowing  all  others  is  the  increase  in  the  world's  output  of 
gold.  The  metal  which  is  the  basis  of  the  world's  currency 
system  has  become  so  plentiful  that  it  has  cheapened;  and  the 
purchaser  of  wares  has  now  to  give  more  gold  for  them,  that  is, 
prices  have  risen. 

From  the  time  of  the  Calif ornian  and  the  Australian  gold  dis- 
coveries, for  almost  half  a  century,  the  world's  annual  gold  out- 
put was  curiously  constant,  at  a  figure  somewhat  over  one 
hundred  million  dollars.  The  discovery  of  new  gold  fields  and 
the  perfection  of  new  processes  effected  a  revolution.  The 
output  of  1896  first  exceeded  the  figure  of  two  hundred  million, 
in  1899  it  passed  the  mark  of  three  hundred,  in  1906  and  in 
succeeding  years  past  1910  it  never  fell  below  four  hundred 
million. 

While  some  classes  in  the  community  lose  in  a  period  of  rising 
prices,  particularly  wage-earners  and  bond-holders  whose  in- 
come rises  slowly  in  comparison  with  the  increase  in  the  cost 
of  living,  the  speculators,  merchants  and  manufacturers  find 
in  such  a  period  a  great  opportunity  to  make  money  and  busi- 
ness rapidly  expands.  The  following  pages  will  describe  a 
noteworthy  development  of  industry  and  trade  iff  the  period 
immediately  preceding  the  World  War;  and  the  reader  will 
realize,  even  when  no  reference  is  made  to  it,  that  the  change 
in  the  price  level  has  been  an  important  factor  in  the  develop- 
ment. One  caution,  however,  seems  at  this  point  particularly 
advisable.  Many  of  the  statistics  following,  in  which  the 


THE    MODERN   ORGANIZATION  343 

development  is  pictured,  are  given  in  terms  of  money  values. 
These  figures  grow  with  the  rise  in  prices,  even  when  there  is 
no  change  in  the  physical  amount  of  business  transacted, 
and  are  an  accurate  index  of  the  volume  of  trade  only  when  they 
are  reduced  to  an  extent  corresponding  with  the  rise  of  prices. 

QUESTIONS  AND  TOPICS 

1.  In  the  example  given,  sect.  386,  distinguish  the  producer,  the 
transporter,  and  the  consumer.     Show  how  each  one  of  these  gained  by 
the  advance  in  organization.     Did  any  one  lose  by  it? 

2.  Of  what  wares  are  large  amounts  still  kept  in  storehouses,  and 
why?    [Cf.  U.  S.  Monthly  Summary,  Oct.,  1903,  vol.  11.  no.  4,  pp.  1033- 
1095,    Warehousing   industry   in   U.    S.] 

3.  Study,  from  newspaper  accounts,  the  effect  of  an  interruption  of 
commerce  by  one  of  the  causes  suggested  in  the  text. 

4.  Distinguishing  producer,  middleman,  and  consumer,  show  what 
has  been  the  effect  on  each  of  the  introduction  of  the  telegraph. 

5.  Service  of  the  postal  system  to  commerce.    [James  in  Depew,  One 
hund.  years,  chap.  5.] 

6.  Development  of  the  modern  system  of  advertising.     [Ayer  in 
Depew,  One  hund.  years,   chap.   13.] 

7.  Nobody  complains  because  the  farmer  who  grows  wheat  or  wool 
does  not  also  make  flour  or  cloth.    Is  there  any  good  reason  why  the  n.an 
who  makes  the  flour  or  cloth  should  also  market  it? 

8.  Study  the  biography  of  some  great  merchant,  and  find  out  whether 
he  made  money  out  of  people,  or  made  money  for  people  and  kept  only 
a  share  for  himself.    [James  Burnley,  Millionaires  and  kings  of  enterprise, 
Lond.  and  Phila.,  1901;  Fortunes  made  in  business,  London,  1884,  2  vols.] 

9.  Make  a  genealogical  chart,  showing  how,  from  a  single  ancestor 
(the  medieval  artisan)  the  many  specialists  in  modern  manufactures  and 
trade  have  proceeded.     [Small  and  Vincent,  Introduction  to  Study  of 
society,    contains  a  chart  of  this   character,   which   may  be   used  for 
guidance.    See  the  U.  S.  Census  or  a  business  directory  for  suggestions 
of  the  present  organization.] 

10.  If  you  have  personal  knowledge  of  some  trade  or  manufacture, 
write  a  report  on  the  development  of  its  organization  and  the  resulting 
specialization. 

11.  Write  a  report  on  the  advantages  to  society  of  (a)  fire  insurance, 
or  (b)  speculation.     [Hadley,  Economics,  chap.  4,  or  other  manual  of 
economics;  H.  C.  Emery,  Speculation  on  the  stock  and  produce  exchanges 
of  the  United  States,  N.  Y.,  1896,  Columbia  Studies,  7:  283-512.] 


344  A  HISTORY  OF  COMMERCE 

12.  Write  the  history  of  any  institution  for  periodical  trade,  like  a 
market  or  fair,  which  has  ever  existed  in  your  neighborhood.    Has  it  any 
commercial  importance  at  present?     [Residents  of  the  original  thirteen 
colonies  and  of  the  older  States  will  find  in  local  histories  and  early  legisla- 
tion much  information  on  this  subject.] 

13.  The  London  exposition  of  1851.    [McCarthy,  Hist.,  vol.  1,  chap. 
21.] 

14.  Write  the  history  of  some  produce  exchange.    [Emery,  Specula- 
tion;   local  history  and  biography,  reports  of  the  exchange.] 

15.  Note,  in  connection  with  sect.  394,  that  the  industrial  organi- 
zation has  become  so  complex  in  recent  times  that  this  book  cannot  follow 
out  topics  which  were  treated  in  earlier  periods.     For  the  importance  of 
capital  and  of  large  scale  enterprise  at  present  see  the  books  on  economies, 
on  railroads,  trusts,  etc. 

16.  Advantages  of  the  modern  department  store.    [Scribner's  Maga- 
zine, 1897,  vol.  21,  p.  4ff.;   restrictions  of  space  forbid  the  treatment  of 
the  organization  of  retail  trade  in  the  text,  but  many  interesting  and 
fruitful  topips  may  be  found  in  studying  it.] 

17.  The  business  of  a  modern  bank.     [Scribner's  Magazine,  1897,  vol. 
21,  p.  575  ff.;    manuals  on  economics  and  banking.] 

18.  The   benefits   of   commercial   and   credit   agencies.      [Question 
bankers  and  business  men;    I  find  no  historical  treatment  of  the  topic 
available  in  English.] 

19.  Character  and  course  of  a  commercial  crisis.     [Manuals  of  eco- 
nomics.] 

20.  Write  the  history  of  some  particular  crisis.      [Bibliography  in 
Jones,  Bowker  and  lies,  and  Palgrave;   consult  narrative  histories  of  the 
period,  and  periodical  articles.] 

21.  Effect  of  the  gold  discoveries  about  1850.      [Rand,  EC.  hist., 
chap.  10,  from  Cairnes.] 


BIBLIOGRAPHY 

This  chapter  touches  so  closely  the  field  of  economics  that  it  seems  un- 
necessary to  duplicate  the  references  which  are  supplied  in  abundance 
by  the  manuals  on  that  subject.  See  for  bibliography  Bowker  and  lies, 
and  Bullock's  Introduction  to  the  Study  of  Economics,  N.  Y.,  1897.  A 
full  classified  bibliography  of  commercial  crises  will  be  found  in  Edward  D. 
Jones,  Economic  crises,  N.  Y.,  Macmillan,  1900,  pp.  225-245.  The 
book  which  covers  most  fully  the  topics  treated  here  is  Wells,**  Recent 
econ.  changes.  References  on  special  topics  are  given  above. 


CHAPTER  XXXIV 

COMMERCIAL  POLICY 

404.  War  and  peace  in  the  nineteenth  century.  —  Although, 
for  the  convenience  of  a  round  number,  the  date  180$  has  been 
chosen  in  this  book  to  fix  the  beginning  of  the  recent  period, 
the  great  changes  which  marked  the  passing  of  previous  con- 
ditions  began  with  the  French  Revolution  of  1789.    The  effects- 
of  the  revolution  were  soon  felt  outside  the  country  in  which 
it  started.    In  a  few  years  the  powers  of  Europe  were  engaged 
in  a  war  which,  with  slight  intermission,  endured  for  almost 
the  period  of  a  generation,  and  ceased  finally  only  with  the 
defeat  of  Napoleon  at  Waterloo.     Since  1815  commerce  has 
enjoyed  singular  freedom  from  the  vexation  of  war,  and  our 
attention  will  be  occupied  in  this  chapter  mainly  with  the 
commercial  policy  of  states  at  peace.    The  convulsive  struggle, 
however,  in  which  the  century  began,  has  such  importance,, 
commercial  as  well  as  political,  that  it  demands  more  than 
passing  comment. 

405.  French  privateers  and  English  commerce.  —  The  com- 
mercial interest  of  the  revolutionary  and  Napoleonic  wars 
centers  in  the  contest  between  France  and  England.     These 
two  powers  were  the  greatest  commercial  states  of  Europe, 
and    France    still    retained    important    colonial    possessions. 
England,   however,   had   specialized   in   the   development   of 
sea  power,  while  France  now  followed  the  course  to  which 
she  had  long  been  tending  and  sought  to  win  the  victory  by 
the  development  of  her  power  on  land.     After  1795  France 
abandoned  the  policy  of  maintaining  great  fleets  to  oppose 
the  British,  sacrificed  the  merchant  vessels  flying  the  French 

345 


346  A  HISTORY  OF  COMMERCE 

flag,  and  sought  to  destroy  the  commerce  on  which  the  life 
of  England  depended  by  sending  out  innumerable  privateers  to 
prey  upon  it.  France  enjoyed,  apparently,  an  extraordinarily 
favorable  position  for  making  this  policy  effective.  The  port 
of  London  carried  on  more  than  half  of  British  foreign  trade ;  of 
the  ships  which  contributed  to  its  annual  record  of  thirteen 
or  fourteen  thousand  entries  and  departures,  two  thirds  had 
to  pass  through  the  English  Channel;  and  French  privateers, 
sailing  at  sundown  from  a  home  port,  could  reach  their  cruising 
ground  before  it  was  light  again.  Some  of  the  French  priva- 
teers inflicted  very  serious  loss  on  the  British.  A  large  one, 
captured  in  1799,  is  said  to  have  taken  160  prizes  in  four  years, 
and  to  have  cleared  for  her  owners  in  Bordeaux  five  million 
dollars.  English  ships  were  forced  to  gather  in  convoys,  sailing 
under  the  protection  of  ships  of  war.  Fleets  of  200  or  300 
vessels  were  not  unusual,  and  sometimes  500  or  1,000  were 
seen  together,  in  dangerous  places  like  the  Chops  of  the  Channel 
or  the  entrance  to  the  Baltic.  This  system  consumed  the  time 
and  money  of  English  merchants,  and  did  not  entirely  prevent 
losses,  which  amounted  perhaps  to  2  per  cent  or  more  of  the 
total  volume  of  British  trade.  Still,  the  effort  of  France  to 
crush  her  enemy  by  this  means  was  clearly  futile.  France,  on 
the  other  hand,  saw  her  commerce  decline  until,  as  a  literal 
fact,  not  a  single  merchant  vessel  flying  the  French  flag  was  on 
the  seas.  In  1800  France  received  directly  from  Asia,  Africa, 
and  America  less  than  $300,000  worth  of  goods  altogether, 
and  exported  to  those  continents  only  $56,000. 

406.  Napoleon  and  the  Continental  System.  —  A  new  period 
in  the  war  against  commerce  can  be  dated  from  the  reopening 
of  hostilities,  after  a  brief  interval  of  peace,  in  1803.  Napoleon, 
now  the  ruling  spirit  in  France,  found  that  a  direct  contest 
with  the  English  on  their  own  element,  the  sea,  was  hopeless. 
His  schemes  for  the  conquest  of  his  great  enemies  may  be 
summarized  as  follows:  first,  direct  invasion,  from  which  he 
was  always  deterred  by  the  English  sea  power;  second,  a  blow 
at  England  through  her  eastern  empire,  to  which  the  Egyptian 


COMMERCIAL  POLICY  347 

expedition  was  preparatory;  and  finally,  the  "commercial 
strangulation"  of  England  by  the  exclusion  of  her  goods  from 
Europe.  This  last  scheme,  to  which  his  efforts  finally  nar- 
rowed themselves,  simply  continued  a  policy  which  had  already 
been  applied  in  France,  of  excluding  the  wares  and  ships  of 
British  commerce.  Napoleon  was  able,  however,  by  his  extraor- 
dinary successes  on  land,  to  extend  the  system  of  prohibition 
far  beyond  the  bounds  of  France,  and  make  it  truly  deserving 
of  its  name  of  Continental  System.  By  1809  he  had  closed  to 
English  trade  all  Europe  except  Turkey,  Sicily,  and  Portugal. 
Decrees  named  from  the  place  at  which  they  were  issued 
(Berlin,  Milan),  sought  with  savage  thoroughness  to  stop  all 
openings  through  which  the  English  might  carry  on  their 
trade  and  recruit  their  resources  •  for  the  war  against  him. 
Commerce  with  Europe,  according  to  Napoleon's  plan,  was  to 
be  carried  on  exclusively  by  his  allies  or  by  neutrals  like  the 
Americans;  and  the  English,  by  being  totally  excluded,  were 
to  be  starved  into  submission. 

407.  English  reprisals ;  the  position  of  neutrals.  —  To  these 
measures  England  replied  with  various  Orders  in  Council  which 
matched  in  spirit  Napoleon's  decrees.  As  Napoleon  sought  to 
exclude  England  from  European  commerce,  so  England  sought 
to  drive  the  commerce  of  Napoleon's  allies  from  the  sea,  and, 
furthermore,  to  make  neutral  commerce  aid  her  in  her  measures 
against  him.  An  order  of  1807  required  any  neutral  trading 
with  the  Continent  to  stop  at  a  British  station  both  going  and 
coming,  to  land  and  reship  the  cargo,  and  to  pay  certain  duties. 
Its  purpose  was  to  make  England  the  center  and  warehouse  of 
the  world's  commerce.  Neutrals  were  placed  between  the  upper 
and  the  nether  millstone.  In  obeying  the  orders  of  either 
belligerent  they  exposed  themselves  to  the  punishment  of  the 
other.  The  merchants  of  the  United  States,  who  had  profited 
by  the  early  stages  of  the  war  to  extend  their  commerce  greatly, 
were  forced  into  the  seclusion  of  the  embargo  (to  be  described 
later),  and  were  led  in  1812  to  the  declaration  of  open  war 
with  England 


348  A   HISTORY  OF  COMMERCE 

408.  Failure  of  the  Continental  System. — England  scarcely 
needed  political  allies  in  a  contest  in  which  the  material  in- 
terests of  most  of  the  people  of  Europe  were  allied  with  her 
own.     The  obstacles  to  commerce  with  the  Continent  caused 
the  prices  of  articles  like  the  colonial  wares  to  rise  to  double, 
triple,  even  tenfold,  what  they  were  in  England.    The  reader 
will  remember  that  the  practical  beginnings  of  beet  sugar 
manufacture  can  be  dated  from  this  period  of  dearth.    Com- 
mercial forces  were  too  strong  for  any  political  restrictions, 
and  smugglers  brought  goods  to  the  people  who  wanted  and 
would  pay  for  them,  despite  all  penalties.     At  a  time  (1809-10) 
when  all  the  great  ports  from  Riga  to  Triest  were  closed,  goods 
reached  the  interior  still,  through  the  Greek  islands,  Malta, 
parts  of  Spain,  the  Channel  Islands,  and  Heligoland.    Napoleon 
himself   had   to   recognize   the  impossibility   of    making  the 
Continental  System  effective.     He  clad  his  own  armies  in 
English  cloth,  sold  constantly  licenses  to  evade  his  own  decrees, 
and  sought  to  win  the  profits  away  from  smugglers  by  allowing 
the  introduction  of  colonial  products  on  payment  of  duties 
equivalent  to  the  smugglers'  gain.     Certain  branches  of  pro- 
duction and  manufacture  were  furthered  on  the  Continent  by 
the  restrictions  on  trade,  but  the  Continental  System,  on  the 
whole,  resulted  only  in  loss  to  the  people  and  in  the  defeat  of 
Napoleon's  own  plans.     It  furnishes  a  signal  example  of  the 
futility  of  attempting  to  crush  a  sea  power  like  England, 
without  meeting  it  on  its  own  element. 

409.  Effect  of  the  war  on  England  and  France.  —  The  effect 
of  the  war  and  the  prohibitive  system  was  necessarily  injurious 
to  British  commerce,  and  showed  itself  in  a  decline  of  British 
exports.     The  injury,  however,  far  from  being  mortal,  was 
extremely  slight.    Smuggling  was  incessant,  and  if  one  opening 
to  British  trade  was  closed  another  was  quickly  found.    When 
Holland  became  allied  to  France  and  hence  closed  to  England, 
British  exports  to  Germany  increased  rapidly;    the  German 
people  were  not  consuming  more  British  goods,  but  acted 
merely  as  distributing  agents,  through  whom  the  goods  reached 


COMMERCIAL  POLICY  349 

their  old  markets.  Napoleon  could  not  forever  coerce  a  whole 
continent,  and  his  blockade  was  generally  evaded  in  northern 
Europe,  with  the  connivance  of  the  governments,  before  1810. 
On  the  last  day  of  that  year  the  Czar  of  Russia  bade  open 
defiance  to  the  Continental  System;  and  it  crumbled  beyond 
hope  of  repair  after  the  failure  of  the  Moscow  campaign.  Even 
the  losses  which  England  suffered  were  made  up,  in  considerable 
part,  by  the  profits  which  she  secured  from  the  expansion  of 
neutral  trade.  England  gained  valuable  additions  to  her 
maritime  empire  (Malta,  Heligoland,  Cape  Colony,  Ceylon, 
etc.),  and  entered  the  nineteenth  century  with  her  commercial 
primacy  established  beyond  dispute.  France,  on  the  other 
hand,  emerged  from  the  struggle  weakened  at  home  and  shorn 
still  further  of  possessions  abroad.  Hayti  (or  San  Domingo) 
had  been  lost  by  a  native  revolt;  the  Louisiana  territory  had 
been  ceded  to  the  United  States;  and  some  of  her  small  islands 
had  passed  into  the  hands  of  England. 

410.  Other  wars  of  the  nineteenth  century.  —  After  the 
conclusion  of  this  great  war  the  world  enjoyed  a  long  interval 
of  peace.  The  nineteenth  century  has  been  marked  by  in- 
ternal political  development,  rather  than  by  international 
strife.  The  growth  of  the  spirit  of  nationality,  the  idea  that 
people  conscious  of  likeness  in  language,  religion,  etc.,  should 
be  grouped  under  the  same  government,  has  led  to  several 
sharp  struggles  between  states;  but  these  have,  in  general, 
been  short  and  of  no  great  commercial  significance.  More 
important,  from  the  commercial  standpoint,  has  been  the  revo- 
lution in  South  America,  which  has  enabled  the  people,  for- 
merly bound  by  the  restrictions  of  the  colonial  system,  to 
establish  independent  trade  relations.  Commerce  was  seriously 
affected,  moreover,  by  the  Civil  War  in  the  United  States, 
which  closed  to  the  world  for  a  few  years  its  great  source  of 
supply  of  cotton.  Other  countries  proved  incapable  of  supply- 
ing the  lack;  a  considerable  portion  of  the  English  people 
(one  fifth,  it  was  said  then),  supported  by  the  cotton  manu- 
facture, suffered  from  the  stoppage  of  work;  and  consumers 


350  A  HISTORY  OF  COMMERCE 

were  forced  to  adopt  other  clothing  materials,  and  did  not, 
for  many  years,  use  cotton  as  freely  as  before.  Of  the  other 
wars  preceding  1914  the  only  one  that  had  great  economic 
significance  was  the  war  between  Japan  and  Russia  in  1905, 
which  brought  into  the  rank  of  the  great  powers  an  Asiatic 
country  with  far-reaching  commercial  ambitions. 

411.  Removal  of  old  obstacles  to  commerce.  —  The  greatest 
benefit  which  Europe  enjoyed  from  the  French  Revolution  and 
the  ensuing  wars  was  the  removal  of  many  remnants  of  feudal 
institutions  which  had  persisted,  petrified  as  it  were,  to  this 
late  period  of  history.     Of  these  remnants  none  was  more 
harmful  to  commerce  than  the  feudal  institution  of  the  staple. 
This  flourished  especially  in  the  German  states,  and  resulted 
in  depriving  of  a  large  part  of  their  commercial  value  the 
German  rivers,  which  were  by  nature  the  cheapest  and  best 
means  of  transportation.     It  was  impossible  to  travel  far  on 
any  German  river  without  reaching  a  staple,  where  the  boat- 
man was  subject  to  delay,  inconvenience,  and  considerable 
expense.     On  the  Rhine,  for  instance,  there  were  thirty-two 
stations  of  this  character  where  dues  were  still  levied  in  1800. 
As  far  as  regarded  the  effect  on  commerce  the  flow  of  the  rivers 
might  as  well  have  been  interrupted  by  cataracts.    It  was  a 
great  step  in  progress,   therefore,    when  these  interruptions 
were  removed,  as  little  by  little  they  were  in  the  first  half  of 
the  nineteenth  century.    The  principle  of  free  navigation  was 
extended  gradually  to  include  important  international  rivers 
like  the  Scheldt  and  the  Danube.    The  reader  will  remember 
that  in  the  Middle  Ages  various  countries  tried  to  monopolize 
parts  of  the  sea  itself.     Denmark  had  kept  its  hold  on  the 
straits  leading  into  the  Baltic  Sea,  and  required  ships  to  stop 
at  Elsinore  and  pay  toll,  until  1857,  when  it  sold  out  its  right 
to  levy  toll  on  the  payment  of  a  lump  sum  by  the  countries 
interested  in  free  navigation. 

412.  Customs  tariffs ;  the  prohibitive  system.  —  The  most 
important  topic  which  remains  to  be  considered  in  this  chapter 
is  that  of  commercial  policy  as  shown  in  the  customs  tariffs. 


COMMERCIAL  POLICY  351 

The  details  of  tariff  policy  must  be  left  to  later  chapters,  in 
which  the  different  states  will  be  considered  separately;  place 
can  be  found  here  only  for  a  brief  review  of  the  general  course 
of  development,  and  for  a  consideration  of  some  of  the  factors 
which  explain  the  great  changes. 

Only  a  few  years  before  the  outbreak  of  the  French  Revo- 
lution France  and  England  had  agreed  to  a  commercial  treaty, 
which  marked  a  great  departure  from  the  restrictive  principles 
of  the  old  mercantilist  policy,  and  seemed  to  promise  a  new 
era  of  freedom  in  trade.  The  outbreak  of  war  destroyed  the 
new  system  almost  as  soon  as  it  had  been  carried  into  effect, 
and  changed  the  relations  between  the  two  states  into  that 
attitude  of  fierce  antagonism  which  has  been  described  above. 
The  return  of  peace  found  the  tariff  systems  of  both  France 
and  England  set  in  the  old  lines.  The  tariffs  included  a  vast 
number  of  duties,  both  on  imports  and  on  exports;  the  rates 
were  high  and  often  prohibitive;  the  protection  of  national 
shipping  by  navigation  acts  was  maintained.  Similar  char- 
acteristics marked  the  tariffs  of  other  European  states,  and 
this  period  may  fitly  be  termed  the  era  of  prohibition  in  recent 
commercial  policy. 

413.  The  periocLof  free  trade,  1860-1880.  —  The  prohibitive 
system  held  its  ground,  however,  only  by  force  of  custom  and 
by  the  active  support  of  small  groups  whom  it  favored.  The 
writings  of  French  and  English  economists,  of  whom  Adam 
Smith  was  the  great  representative,  had  convinced  thinking 
men  that  the  people  and  countries  of  Europe  would  benefit  by 
greater  freedom  of  trade,  and  governments  waited  only  for 
favorable  conditions,  political  and  economic,  to  lower  their 
customs  duties.  The  movement  toward  reform  was  at  first 
local,  finding  place  especially  in  England  and  Germany.  Soon 
after  the  middle  of  the  century,  however,  it  became  general  in 
Europe,  and  led  to  such  sweeping  changes  that  the  period 
extending,  roughly,  from  1860  to  1880  has  often  been  called 
the  free-trade  period  in  commercial  history.  This  was  the 
time  when  the  technical  inventions,  especially  the  application 


352  A  HISTORY  OF  COMMERCE 

of  steam  on  a  large  scale  to  manufactures  and  transportation, 
were  first  showing  their  full  power  in  increasing  productiveness. 
At  this  time  a  state  which  secluded  itself  commercially  seemed 
to  be  renouncing  the  chance  to  share  in  the  great  movement 
of  progress.  Industrial  states  sought  markets  for  their  manu- 
factures and  sources  of  supply  for  their  food  and  raw  materials. 
Agricultural  states  found  the  offers  for  their  surplus  products 
too  tempting  to  be  refused.  So  many  profitable  openings 
appeared  everywhere  that  there  was  little  dread  of  competition 
and  little  call  for  protection. 

414.  Reduction  of  customs  duties.  —  In  this  period,  there- 
fore, there  was  a  general  overhauling  of  the  old  tariffs.    Export 
duties  disappeared.     Prohibitions  were  dropped,  and  import 
duties  were  reduced.     Narrow  restrictions,  designed  to  favor 
merchant  shipping,  were  reformed.     Liberal  commercial  trea- 
ties became  the  fashion,  and  Europe  was  soon  covered  with  a 
network  of  them  after  England  and  France  had  set  the  ex- 
ample in  1860.    These  treaties  became  of  especial  importance 
because  they  now  included  generally  the  clause  of  "the  most 
favored  nation,"  by  which  a  participant  in  the  treaty  was 
assured  that  it  should  share,  without  delay  and  without  need 
of  recompense,  in  any  favors  that  might  be  granted  to  other 
states.    The  slightest  concession,  therefore,  effected  a  general 
reduction  of  duties  in  Europe.    An  English  author,  writing  in 
1882,  found  that  in  the  period  from  1860  to  1880  tariffs  had 
been  raised  in  only  two  of  the  sixteen  European  states.    Apart 
from  these  two  exceptions,  which  were  not  important,  tariffs 
had  undergone  substantial  reductions;   of  2,140  items  existing 
in  1860  only  136  had  been  raised,  while  900  had  remained  the 
same  and  no  less  than  1,104  had  either  been  lowered  or  re- 
moved altogether  from  the  list.    These  reforms  were  undoubt- 
edly responsible  in  part  for  the  remarkable  growth  of  the 
world's  commerce  in  the  period  which  they  covered. 

415.  The  return  to  protection.  —  The  free-trade  movement 
has  been  followed,  in  the  last  quarter  of  the  century,  by  a 
decided  reaction  to  protection.     Since  about  1880  increase  in 


COMMERCIAL  POLICY  353 

the  customs  duties  has  been  the  rule  in  Europe,  and  reductions 
have  been  exceptional.  No  single  cause  can  be  held  respon- 
sible for  this  change.  The  growth  of  national  feeling  and  of 
international  tension  in  Europe  since  1870  has  undoubtedly 
disposed  governments  to  listen  more  readily  to  the  complaints 
of  citizens  who  suffer  from  competition,  and  ask  for  protection 
against  foreigners.  Competition,  moreover,  has  widened  its 
range  of  action  and  become  more  keen.  The  countries  which 
gained  new  markets  for  their  agricultural  products,  and  flour- 
ished during  the  period  of  development  of  steam  transportation 
in  Europe,  have  lost  their  foreign  markets  and  find  their  home 
markets  menaced,  as  the  transportation  system  has  grown  to 
embrace  other  continents  and  now  brings  cheap  products  from 
across  the  seas  to  the  door  of  the  European  consumer.  Coun- 
tries which  willingly  accepted  the  manufactures  of  advanced 
industrial  states  when  their  own  industries  were  in  a  primitive 
stage  of  development  have  since  aspired  to  establish  modern 
factories  of  their  own  at  home. 

In  spite  of  the  return  to  higher  duties  the  present  protec- 
tionist policy  has  retained  many  of  the  changes  of  the  period 
of  free  trade.  The  statesmen  who  guide  the  commercial  policy 
of  European  countries  have  discarded  prohibitions,  and  use 
duties  discriminating  against  particular  countries  only  excep- 
tionally. Down  to  the  close  of  the  century  they  have  con- 
tinued to  grant  to  nations  in  general  the  treatment  accorded 
to  the  most  favored  nation,  and  in  some  ways  have  extended 
the  scope  of  this  practice.  The  general  level  of  duties,  more- 
over, though  it  may  seem  high  in  comparison  even  with  the 
general  average  of  the  period  of  prohibitions,  offers  a  much 
less  effective  bar  to  trade,  because  of  the  reduction  of  the 
expense  of  transportation.  It  is  impossible  to  state  accurately 
the  relative  height  of  various  tariffs.  The  following  table 
gives  an  estimate  of  the  tariffs  on  some  important  manufac- 
tures towards  the  close  of  the  century:  Russia  130  per  cent, 
United  States  72  per  cent,  France  30  per  cent,  Germany  25  per 
cent,  Belgium  13  per  cent,  New  Zealand  9  per  cent,  etc. 


354  A  HISTORY  OF  COMMERCE 

416.  Colonial  policy.  —  Colonial  policy,  a  topic  which  has 
had  for  some  years  a  leading  place  in  public  discussion,  can 
receive  only  brief  consideration  in  this  history.  The  colonial 
ventures  of  the  recent  period  may  in  time  bring  forth  the 
commercial  results  which  their  projectors  promise;  up  to  the 
present  the  results  have  been  small.  Until  far  into  the  century 
European  governments  showed  little  interest  in  the  expansion 
of  their  people  or  the  extension  of  their  power  in  distant  parts 
of  the  world.  Their  attention  was  absorbed  by  the  problems  of 
domestic  and  foreign  policy  in  Europe.  The  colonial  question, 
however,  like  every  other  political  and  economic  question, 
assumed  a  new  aspect  under  the  changes  wrought  by  steam 
and  the  telegraph.  Distant  continents  were,  by  those  changes, 
brought  nearer  to  European  capitals  than  parts  of  the  home 
territory  had  been  before.  The  immense  increase  of  trans- 
marine commerce  which  marked  the  latter  part  of  the  century 
was  carried  on  largely  by  English-speaking  people,  and  seemed 
to  promise  to  states  of  the  Continent  similar  results  if  they 
could  spread  broadcast  their  people  and  power  as  England 
had  done.  The  best  parts  of  the  world  had  already  been  occu- 
pied, it  is  true,  but  great  stretches  of  territory  were  still  free 
from  claimants  of  European  descent.  France  began  to  raise 
her  flag  over  new  territory  in  Africa,  Asia,  and  Oceanica;  the 
Belgian  king  established  his  authority  in  the  region  of  the 
Congo;  the  movement  quickened  to  a  scramble  in  the  '80's; 
and  soon  all  parts  of  the  habitable  world  except  certain  coun- 
tries in  Asia  and  Africa  had  been  brought  under  the  sovereignty 
of  European  powers.  The  colonial  question  —  what  to  do 
with  these  possessions  now  that  they  have  been  secured,  how 
to  govern  them  —  has  not  yet  become  a  part  of  history;  it  is 
still  a  question  of  the  day. 

QUESTIONS  AND  TOPICS 

1.  Prepare  a  chronological  table  of  the  wars  of  the  nineteenth  century, 
from  a  manual  of  recent  history. 

2.  The  English  navy  during  the  Napoleonic  wars.     [Social  England, 
vol.  5,  pp.  391-401,  541-544;   the  sea  stories  of  Captain  Marryat.] 


COMMERCIAL  POLICY  355 

3.  The  Continental  System  and  its  effects.     [Levi,  Hist.  Brit,  com- 
merce, part  2,  chap.  4,  reprinted  in  Rand,  EC.  hist.,  chap.  5;    Rose  in 
Kirkpatrick,  Lectures  on  hist,  of  nineteenth  century,  Cambridge,  1902, 
59-78.] 

4.  Effect  of  Napoleon's  commercial  measures  on  British  finances. 
[Audrey  Cunningham,  British  credit  in  the  last  Napoleonic  war,  Cam- 
bridge,  1910.] 

5.  The   question   of  neutral  rights.      [Schuyler,    Amer.    diplomacy, 
chap.  7;   Reeves,  Two  conceptions  of  the  freedom  of  the  seas,  in  Amer. 
Hist.  Rev.,  April,  1917,  22:  535-543.] 

6.  The  movement  for  independence  in  South  America,  and  its  com- 
mercial results.     [Helmolt,  Hist,  of  the  world,  vol.  1;    History  of  South 
America,  transl.  by  Adnah  D.  Jones,  London  (N.  Y.,  Macmillan),  1899.] 

7.  Free  navigation  of  European  rivers.    [Schuyler,  Amer.  diplomacy, 
chap.  6,  p.  345  ff.] 

8.  The   Sound   Dues.     [Same,   p.   306  ff.]. 

9.  Divide  your  graphic  chart  of  commercial  statistics  into  blocks, 
to  correspond  with  periods  of  commercial  policy;  dates  may  be  chosen  as 
follows,  1800,  1860,  1880,  1900.     Be  cautious,  however,  about  any  con- 
clusions that  may  suggest  themselves. 

10.  Relative  share  of  different  factors  in  recent  commercial  progress. 
[Cf.  W.  E.  Gladstone,  Free  trade,  railways,  and  the  growth  of  commerce, 
Nineteenth  Century  (Magazine),  Feb.,  1880,  7:  367-378;   but  do  not  re- 
gard this  article  as  settling  a  problem  still  unsolved.] 

11.  Significance  of  the  "most  favored  nation"  clause  in  tariff  history. 
[Reciprocity  and  commercial  treaties,  389-416.] 

12.  Various  systems  of  tariff  policy.     [Reciprocity  and  commercial 
treaties,  461-467.] 

BIBLIOGRAPHY 

The  best  single  reference  on  the  commercial  conditions  and  policy 
of  the  Napoleonic  period  is  Lingelbach,  *  Historical  investigation  and 
the  commercial  history  of  the  Napoleonic  era,  in  Amer.  Hist.  Rev.,  Jan., 
1914,  19:  257-281;  this  provides  a  scholarly  survey  of  the  whole  literature 
of  the  subject  and  can  be  used  as  a  guide  to  further  study.  Of  later  works 
should  be  noted  Frank  E.  Melvin,  Napoleon's  navigation  system,  Univ. 
of  Penn.  thesis,  1919,  N.  Y.,  Appleton. 

On  commercial  policy  in  general  the  best  reference  is  Bastable's 
**  Commerce  of  nations,  which  treats  international  trade,  the  theory 
and  the  history  of  commercial  policy  briefly  but  with  admirable  clearness. 
The  history  of  the  commercial  policy  of  particular  countries  will  be  covered 
in  following  chapters.  A  survey  of  modern  tariff  systems  is  provided  in 
*  Reciprocity  and  commercial  treaties,  published  by  the  U.  S.  Tariff 


356  A  HISTORY  OF  COMMERCE 

Commission,  Washington,  1919;  J.  W.  Root,  Tariff  and  trade,  Liverpool, 
1898,  combines  a  general  discussion  of  the  tariff  question  with  a  review 
of  the  tariff  policy  of  important  commercial  countries. 

Colonial  policy  can  receive  but  scant  treatment  in  this  book.  The 
student  is  referred  to  the  bibliography  by  A.  P.  C.  Griffin,  List  of  books 
relating  to  colonization,  Washington,  second  ed.,  1900,  and  to  the  references 
there  given. 


CHAPTER  XXXV 

ENGLAND:    COMMERCIAL  DEVELOPMENT,   1800-1850 

417.  Importance  of  the  commerce  of  England.  —  In  return- 
ing to  the  study  of  the  development  of  commerce  in  different 
countries  we  shall  take  up  first  the  country  which  at  the  be- 

jginning_Q.f  the  nineteenth  century,  and  at  its  end  as  well,  held 
the  loading  position,  England.  An  English  author  has  made 
the  statement  that  "in  the  eighteenth  century  foreign  trade 
was  of  so  little  importance  to  the  majority  of  the  inhabitants 
of  England,  that  with  one  important  exception  (wheat)  the 
whole  of  it  might  have  been  destroyed  without  making  any 
appreciable  change  in  the  habits  or  wealth  of  the  people." 
This  statement  is  an  exaggeration  which  can  hardly  be  sup- 
ported, but  yet  it  suggests  a  truth  of  great  importance ;  English 
commerce  in  1800  was  merely  an  aid  to  the  development  and 
welfare  of  the  country,  while  it  had  become  in  1900  absolutely 
necessary  to  the  mere  existence  of  the  people. 

418.  Statistics  of  the  growth  of  commerce,  1800-1850. — 
The  period  of  most  rapid  growth  was  the  second  half  of  the 
nineteenth  century,  and  this  period  will  be  reserved  for  special 
consideration  a  little  later.    The  development  in  the  first  half 
of  the  century  is  set  forth  in  the  accompanying  table,  which 
gives  the  figures  for  imports  retained  in  the  country,  and  for 
the   exports  of  home  produce,  according  to  the   system  of 
valuation  in  use  in  this  period,  with  the  sum  of  these  items. 

As  the  population  doubled  in  this  period  it  is  apparent  that 
foreign  commerce,  which  more  than  doubled  in  value,  was 
taking  a  more  important  place  in  the  national  economy  than 
before.  In  the  first  quarter  of  -the  century,  when  England 

357 


358 


A  HISTORY  OF  COMMERCE 


was  passing  through  the  struggle  of  the  Napoleonic  wars  and 
was  recovering  from  their  effects,  trade  was  nearly  stagnant, 
but  it  made  up  in  the  twenty-five  years  that  followed  for  the 
time  that  had  been  lost  before.  If  we  measure  commerce  not 
by  the  value  of  the  wares,  but  by  their  physical  quantity,  the 
increase  was  far  more  striking;  prices  of  many  articles,  espe- 
cially of  the  manufactures  exported,  fell  during  this  period, 
and  consequently  the  same  bulk  of  trade  would  be  represented 
by  much  smaller  figures  in  pounds  sterling.  If  we  returned  to 
the  old  method  of  measuring  trade,  which  retained  " official" 
values  that  did  not  change  with  the  movement  of  market 
prices,  and  which  therefore  affords  a  means  of  measuring  an 
increase  in  the  bulk  of  trade,  we  should  find,  comparing  the 
two  years,  1800  and  1849,  that  exports  grew  from  24  million 
to  190  million  pounds  sterling,  giving  the  enormous  increase 
of  682  per  cent. 

ANNUAL  AVERAGE  TRADE  OF  THE  UNITED  KINGDOM 
(Millions  of  Pounds  and  Dollars) 


Imports 

Exports 

Total 

1801-05  

£28 
30 
29 
20 
26 
33 
36 
47 
57 
72 

$140 
150 
145 
100 
130 
165 
180 
235 
285 
360 

£33 
37 
45 
40 
37 
35 
40 
50 
54 
60 

$165 
185 
225 
200 
185 
175 
200 
250 
270 
300 

£61 
67 
74 
60 
63 
69 
76 
97 
111 
133 

$305 
335 
370 
300 
315 
345 
380 
485 
555 
665 

1806-10  

1811-15  

1816-20  

1821-25  

1826-30  

1831-35  

1836-40  

1841-45  

1846-50  

419.  Change  in  the  relative  importance  of  different  exports. 
—  We  can  expect,  by  studying  the  details  of  exports  in  this 
period,  to  find  the  branches  of  production  in  which  the  English 
were  strong  enough  to  enable  them  to  supply  other  people 
and  to  extend  their  commerce.  Taking  the  figures  for  1850, 


ENGLAND:   COMMERCIAL  DEVELOPMENT,   1800-1850       359 

we  find  the  evidence  of  some  important  changes.  The  old 
staple  of  the  English  export  trade,  woolen  manufactures  and 
yarn,  had  increased  since  1800  in  value,  and  still  more  in  quan- 
tity. It  had  ceased,  however,  to  be  the  standby  of  the  English 
exporter;  this  item  formed  now  less  than  one  seventh  of  the 
exports  instead  of  over  one  fourth.  It  had  been  thrust  into 
the  second  place  by  the  rival  textile  cotton,  which  had  become, 
as  it  was  destined  to  remain  throughout  the  century,  the 
Iparh'np-Jfpm  fffnmncr  T^n^j^T^P-gp^yj^^  Cotton  yarn  and  manu- 
factures made  up  28  out  of  a  total  of  71  million  pounds  sterling. 
Among  other  changes  in  the  list  we  note  the  growth  of  the 
iron  and  steel,  the  hardware  and  the  coal  exports.  Some 
items  are  interesting  because  they  are  still  so  small;  among 
those  which  remained  below  the  million-pound  mark  were 
steam-engines  and  machinery,  pottery,  and  tin  plate. 

420.  Development  of  English  manufactures.  —  It  is  ap- 
parent that  this  period  was  marked  by  a  rapid  development 
of  English  manufactures.  Taking  two  manufactures,  typical 
of  an  advanced  industrial  state,  iron  and  cotton,  we  find  that 
the  increase  in  production  is  estimated  at  over  tenfold  or 
more  than  1000  per  cent;  as  the  quantity  of  population  had 
merely  doubled  it  is  apparent  that  its  quality,  or  the  character 
of  its  occupations,  underwent  a  revolutionary  change.  It  is, 
in  fact,  in  this  first  half  of  the  nineteenth  century  that  the 
enormous  possibilities  latent  in  the  inventions  of  the  eighteenth 
century  became  apparent  and  were  realized.  The  great  inven- 
tions were  not  enough,  in  themselves,  to  transform  industry. 
They  needed  to  be  developed  by  practical  business  men,  who 
could  secure  the  necessary  capital  to  utilize  them  to  the  best 
advantage,  who  had  the  talent  for  organization  enabling  them 
to  build  up  an  efficient  force  of  laborers,  who  could  stimulate 
further  technical  improvements  necessary  to  supplement  the 
great  inventions,  and  who  could  develop  a  mercantile  system 
enabling  them  to  buy  and  sell  large  quantities  to  good  advan- 
tage. Some  English  manufactures  remained  "domestic"  in- 
dustries carried  on  in  the  home  of  the  workman,  but  the  most 


360  A  HISTORY  OF  COMMERCE 

important  advanced  to  the  factory  system,  and  were  thug 
enabled  to  get  the  full  advantage  from  technical  improvements. 

421.  Introduction  of  machinery.  —  It  is  in  this  period  that 
the  knowledge  and  experience  necessary  to  the  proper  handling 
of  machinery  spread  from  narrow  circles  to  broad  groups  of 
men.     The  market  for  machinery  was  thus  established,  and 
the  manufacture  of  tools  and  machines  underwent  a  correspond- 
ing development;    in  1836  it  was  "difficult  to  point  out  any 
leading  mechanical  process,  the  details  of  which  have  not  been, 
by  this  means,  simplified,  and  the  article  produced  brought 
nearer  to  perfection."    Inventors  from  other  countries  sought 
British  shops  to  perfect  their  devices,  and  British  factories  in 
which  to  introduce  them.    Some  of  the  best  textile  machinery 
of  this  period  was  invented  in  the  United  States  and  other 
•countries,  but  was  first  put  to  practical  use  in  England. 

422.  Steam  power  and  railroad  transportation.  —  It  is  in 
this  period,  also,  that  the  steam-engine  became  a  practical 
force  in  English  manufactures.     The  steam-engine  had  been 
introduced  in  Birmingham  in  1780,  but  the  number  of  engines 
in  that  rising  center  of  manufactures  was  in -1815  only  42  and 
in  1830  still  only  120,  while  in  the  nine  years  following  the 
number  rose  to  240,  or  doubled.    In  1835  the  textile  factories 
•of  England  employed  only  a  little  over  50,000  mechanical 
horse-power,  and  of  this  total  nearly  a  quarter  was  still  obtained 
from  water-wheels.    The  beginnings  of  transportation  by  steam 
railroads  can  be  dated,  as  said  before,  from  about  1830. 

423.  Gradual  development  of  the  cotton  manufacture.  — 
The  statement  in  a  previous  paragraph,  that  time  was  needed 
to  develop  the  inventions  before  they  could  be  made  to  serve 
the  interests  of  manufacturers  and  merchants,  is  borne  out 
by  the  history  of  the  most  important  manufacture,  that  of 
ootton.     Most  of  the  basic  inventions  in  cotton  machinery 
were  made  in  the  last  quarter  of  the  eighteenth  century.    As 
early  as  1812  a  man,  using  the  improved  appliances,  could 
produce   200  times  as  much  as  could  be  got  from  the  old 
spinning-wheel.      Yet  it  was  not  until   1820  or   1830   that 


ENGLAND:   COMMERCIAL  DEVELOPMENT,   1800-1850       361 

cotton-spinning  machinery  had  been  practically  developed  and 
introduced  on  such  a  scale  that  the  yarn  exports  began  to  show 
the  full  strength  of  this  new  force;  while  power  weaving  came 
even  later,  and  the  exports  of  cloth  increased  most  rapidly  in 
the  second  quarter  of  the  century.  Other  processes  connected 
with  the  textile  manufacture  present  the  same  history.  Cotton 
printing,  for  instance,  had  been  practised  in  the  eighteenth 
century,  but  in  1800  only  32  million  yards  a  year  were  printed, 
while  in  1830  the  figure  had  risen  to  347.  The  growth  of  the 
cotton  manufacture  was  reflected  in  the  development  of  towns, 
like  Manchester,  Bolton,  and  Liverpool,  which  increased 
immensely  in  population. 

424.  Character  of  the  import  trade.  —  It  will  be  instructive 
to  glance  now  at  the  other  side  of  England's  commercial 
balance  sheet,  and  observe  the  wares  imported  about  the 
middle  of  the  century.  In  1854  the  values  were  as  follows, 
in  round  millions  of  pounds  sterling:  total  152.3,  of  which  the 
chief  items  were  grain  21.7,  raw  cotton  20.1,  timber  10,  sugar 
9.6,  raw  wool  6.4,  tea  5.5,  raw  silk  5.3.  While  it  is  not  safe 
to  make  a  direct  comparison  between  these  values  and  those 
given  previously  to  show  conditions  about  1800,  a  striking 
change  is  apparent  in  the  relative  rank  of  the  items.  A  great 
growth  in  the  importance  of  the  imports  of  breadstuffs  is 
noticeable.  We  shall  see  a  little  later  that  the  English  in 
this  period  gave  up  the  attempt  to  produce  their  food  at  home, 
and  resigned  themselves  to  depending  on  foreign  countries  for 
supplies  which  they  could  purchase  with  their  manufactures. 
Wares  like  sugar,  tea,  coffee,  and  tobacco  had  declined  in 
relative  importance.  The  actual  amount  of  these  commodities 
imported  for  consumption  at  home  had  increased  much  more 
than  would  appear  from  a  comparison  of  the  figures,  and  their 
use  was  constantly  extending  among  the  common  people;  but 
they  were  now  overshadowed  in  trade  by  other  items.  The 
chief  group  of  imports  was  formed  of  raw  materials  for  the 
English  textile  manufacture.  The  cotton  imports,  had,  of 
course,  grown  immensely;  the  home  supply  of  wool,  which  had 


362  A   HISTORY  OF  COMMERCE 

been  almost  sufficient  for  manufactures  in  1800,  needed  now 
to  be  supplemented  by  large  imports  from  abroad;  silk  had 
taken  the  third  place  on  the  list  of  textiles  away  from  flax 
and  hemp. 

425.  Increase  in  importance  of  trade  with  distant  continents. 

—  If  we  attempt  to  trace  the  changes  in  the  direction  of  English 
trade  in  the  first  half  of  the  nineteenth  century,  we  find,  in 
the  maze  of  figures  presented  for  study,  some  facts  standing 
out  as  evident  and  important.    The  trade  with  other  countries 
in  Europe  grew  steadily,  but  grew  slowly  as  a  rule,  and  did  not 
keep  pace  with  the  progress  which  English  trade  was  making 
in  other  parts  of  the  world.     Most  of  the  continental  states 
looked  with  jealousy  on  England's  industrial  development, 
and   checked   the   free   exchange   of  commodities   by  severe 
restrictions.    We  must  look  outside  of  Europe  for  the  field  of 
expansion  of  English  trade.    Africa  still  remained  unimportant 
from   the   commercial   standpoint,   but    America,    Asia,    and 
Australia  dealt  in  increasing  measure  with  the  British  merchant. 

426.  Great  importance  of  the  trade  with  the  United  States. 

—  The  United  States  was,  far  and  away,  England's  best  cus- 
tomer, taking,  near  the  beginning  of  the  century,  when  the 
ports  of  the  continent  were  closed  by  Napoleon,  as  much  as 
one  third  of  the  total  English  exports,  and  at  the  middle 
(1849)  nearly  one  fifth.     "It  affords  strong  evidence  of  the 
unsatisfactory  footing  upon  which  our  trading  relations  with 
Europe  are  established,"  wrote  an  English  author  in  1838, 
"that  our  exports  to  the  United  States  of  America,  which 
with  their  population  of  only  twelve  millions  are  removed  to 
a  distance  from  us  of  3,000  miles  across  the  Atlantic,  have 
amounted  to  more  than  one  half  of  the  value  of  our  shipments 
to  the  whole  of  Europe,  with  a  population  fifteen  times  as 
great  as  that  of  the  United  States  of  America,  and  with  an 
abundance  of  productions  suited  to  our  wants,  which  they 
are  naturally  desirous  of  exchanging  for  the  products  of  our 
mines  and  looms."    The  United  States  paid  for  the  wares  by 
an  export  mainly  of  raw  materials,  and  expecially  of  cotton. 


160 HO 120 100 80 «0 40 

Jaltgmant,  drttn  f  Co.,  Sew  1'arh 


10       CO       80       100      120       110      160       180 


ENGLAND:   COMMERCIAL  DEVELOPMENT,   1800-1850       363 

During  most  of  this  period  England  drew  three  fourths  of  her 
supply  of  raw  cotton  from  the  southern  States. 

427.  Trade  with  other  distant  countries.  —  Other  American 
countries  were  good  customers  of  the  British  manufacturer; 
Brazil,  for  instance,  bought  more  from  England  in  1849  than 
did  England's  nearest  neighbor,  France.     Among  other  inde- 
pendent states   China   deserves  mention.     Trade  with  that 
country  had  been  included  in  the  monopoly  of  the  East  India 
Company  until  1834,  when  it  was  thrown  open  to  British 
merchants  in  general;   the  trade  grew  rapidly  thereafter,  but 
suffered  from  the  restrictions  imposed  by  the  Chinese  until, 
as  a  result  of  the  so-called  Opium  War  of  1842,  the  English 
secured  the  cession  of  Hong-Kong  and  the  opening  of  a  number 
of  ports. 

428.  Trade  with  British  dependencies:    India.  —  In  1850 
between  one  fourth  and  one  third  of  the  .exports  of  the  mother 
country  were  sent   to   British   dependencies.     Among  these 
British  India,  almost  a  continent  itself  if  we  consider  its  area, 
its  population  almost  equal  to  that  of  Europe,  and  the  com- 
plexity of  its  peoples,  took  the  leading  place.    British  India 
alone  took  about  one  tenth  of  the  English  exports.     So  long 
as  the  trade  with  this  country  was  controlled  by  the  East 
India  Company  it  remained  small;    and  the  company  declared 
that  because  of  the  backwardness  and  peculiar  customs  of  the 
natives  it  could  not  be  increased.     The  privilege  of  trading 
with  India  was  granted  to  individual  merchants  in  1793,  but 
under  such  burdensome  restrictions  that  it  led  to  slight  results; 
and  the  nineteenth  century  opened  with  the  Indian  trade  still 
but  a  small  item  in  England's  total.     In  1813,  however,  the 
trade  was  at  last  thrown  open,  and  the  effect  was  immediately 
manifest;  in  the  first  year  of  the  new  policy  private  merchants 
exported  more  than  did  the  company,  and  soon  they  had 
developed  the  trade  to  an  extent  undreamed  of  by  the  monop- 
olists.    India  proved  to  be  just  the  country  which  English 
merchants  were  seeking  as  a  market  for  the  expanding  cotton 
manufacture.     In  the  eighteenth  century  protection  was.  de- 


364  A  HISTORY  OF  COMMERCE 

manded  in  England  against  the  competition  of  Indian  textiles, 
but  soon  the  tables  were  turned,  and  manufacturers  in  India 
complained  that  they  were  being  ruined  by  the  importation 
of  English  cotton  goods;  about  1850  British  India  took  more 
cotton  manufactures  than  any  other  country,  and  nearly  one 
sixth  of  the  total  exports  of  this  most  important  commodity 
of  England. 

429.  Colonies  in  North  America  and  Australasia.  —  Next  in 
importance  to  British  India  came  the  two  groups  of  the  North 
American  and  the  Australian  colonies.  The  colonies  on  the 
continent  of  North  America  were,  in  spite  of  their  political 
allegiance,  a  far  less  important  market  than  the  republic  on 
their  southern  border  which  had  declared  its  independence  in 
1776.  They  supplied,  however,  a  fairly  steady  and  a  growing 
demand  for  English  products  which  put  them  in  sharp  contrast 
with  the  West  Indian  colonies.  These  island  colonies  had 
been,  in  the  early  part  of  the  century,  the  field  of  rich  returns 
in  trade,  but  their  productiveness  depended  on  a  system  of 
slave  plantations,  and  when  slavery  was  abolished  in  them  in 
1833  their  commerce  declined  rapidly. 

Thanks  to  the  wide  extent  of  her  colonial  dominions, 
England  could  hope  to  gain  in  one  part  of  the  world  if  she 
lost  in  another,  and  the  development  of  the  Australian  colonies 
in  this  period  promised  to  atone  for  any  decline  in  the  West. 
The  British  flag  was  first  raised  in  Australia  in  1788.  The 
young  colonies  were  out  of  the  track  of  the  trade  of  the  time, 
and  seemed  of  such  small  importance  that  one  was  made  a 
penal  settlement,  but  the  natural  resources,  especially  the 
fitness  for  sheep-raising,  induced  a  steady  growth  of  popula- 
tion, and  a  considerable  trade,  even  before  the  gold  discoveries 
in  the  middle  of  the  century. 

QUESTIONS  AND  TOPICS 

1.  What  do  we  mean  when  we  speak  of  the  "importance"  of  a  coun- 
try's commerce?  The  reader  who  reflects  upon  this  question  will  find 
that  at  least  three  different  standards  are  taken  to  measure  importance. 


ENGLAND:   COMMERCIAL  DEVELOPMENT,   1800-1850       365 

(1)  Mere  bulk  or  value.  The  commerce  of  the  British  Empire  would  be 
called  the  most  important  in  the  world,  because  it  is  larger  than  that  of 
any  other  state.  (2)  The  needs  of  the  people  of  the  country.  A  consider- 
able number  of  Englishmen  would  starve  without  commerce.  In  this 
sense  commerce  is  even  more  important  to  the  miners  of  Alaska,  for 
they  would  practically  all  starve  without  it.  (3)  The  needs  of  other 
countries  for  the  exports  of  a  given  country.  In  this  sense  the  United 
States  has  perhaps  the  most  important  commerce  in  the  world,  because 
it  supplies  so  much  of  the  world's  need  for  cotton,  copper,  foodstuffs,  ete. 
Endeavor  to  find  examples,  in  this  book  or  in  others,  of  the  different 
uses  of  the  word;  apply  it  in  different  uses  to  different  countries. 

2.  Treat  the  statistics  in  sect.  418  as  suggested  previously,  by  graphic 
representation.    How  did  British  commerce  compare  in  growth  with  world 
commerce?     Did  England  keep  her  share  in  the  world's  trade?     Try  to* 
find  in  English  history  reasons  for  the  ups  and  downs  of  trade,  and  for  its 
gains  and  losses  in  comparison  with  the  world's  trade.    Beware,  however, 
of  hasty  conclusions;  many  pitfalls  are  concealed  in  commercial  statistics. 
In  the  table  in  the  text,  for  example,  the  early  figures  are  those  of  total 
exports   and  imports  of  merchandise,   including  wares  simply  passing; 
through  English  hands  to  foreign  customers;    the  figures  for  1816  and 
the  following  years  show  only  exports  of  British  produce  and  manufacture, 
and  imports  retained  in  the  country.     This  change  in  the  method  of 
measurement,  rather  than  the  crisis  following  the  Napoleonic  wars,  ex- 
plains the  drop  in  the  figures.    This  last  method  of  measurement  will  be 
followed  in  later  tables. 

3.  The  following  list  gives  the  value,  in  millions  of  pounds,  of  all 
items  over  1.0,  in  total  exports  of  71.3.    Coal,  etc.,  1.2,  cotton  yarn,  6.3, 
cotton  manufactures  21.8,  haberdashery  and  millinery  1.4,  hardware  and 
cutlery  2.6,  linen  manufactures  3.9,  iron  and  steel  5.3,  woolen  yarn  1.4, 
woolen  manufactures  8.5.      (If  various  other  items  were  grouped  we 
could  add:    copper  about  2.,  silk  about  1.) 

Arrange  these  items  and  represent  them  by  spaces  on  a  line,  for  help 
in  realizing  their  relative  importance,  and  for  comparison  with  earlier 
and  later  conditions.  [See  Statesman's  Year-Book  for  present  trade. 
Note  that  these  items  include  only  home  produce  and  manufactures,  so 
foreign  produce,  such  as  colonial  wares,  should  be  excluded  in  making 
the  comparison  with  another  period.  Statistics  of  this  period  give  only 
quantities,  not  values,  of  foreign  and  colonial  merchandise  exported. 
Values  of  foreign  and  colonial  merchandise  exported  are  available  for 
1854  and  the  following  years.  In  1854  the  items  over  one  million  pounds 
were:  cotton  2.3,  indigo  1.2,  wool  1.4.  Among  the  items  under  one 
million  were:  coffee  .7,  wine  .7,  raw  silk  .7,  tea  .5,  rice  .5,  guano  .5,  raw 
sugar  .3,  unstemmed  tobacco  .3.  What  changes  are  suggested  by  these 
figures,  in  comparison  with  those  of  about  1800?] 


366  A  HISTORY  OF  COMMERCE 

4.  Review  the  substance  of  sections  245  ff.,  or  read  the  account  of 
the  great  inventions  and  their  effects  in  Rand,  EC.  hist.,  chap.  2. 

5.  Mining  and  metal  production  up  to  1846.     [Traill,  Soc.  England, 
6:  194-199.] 

6.  Coal   mining.      [Same,    6:   367-379.] 

7.  Development  of  the  English  transportation  system.     [Same,  6: 
199-211;    McCarthy,  Hist.  vol.  1,  chap.  4;    Ward,  Reign,  2:  83-111.] 

8.  Development  of  the  textile  manufactures.    [Soc.  England,  6:  69- 
75.] 

9.  Study  the  items  in  sect.  424  in  the  way  suggested  for  sect  419. 

10.  Review  sect.  412,  on  the  tariff  policy  of  the  period  in  Europe; 
note  that  the  United  States  had  a  low  tariff,  and  that  trade  in  the  other 
continents  was  practically  free. 

11.  The  Opium  War.    [McCarthy,  Hist.,  vol.  1  chap.  8;   Robert  K. 
Douglas,  China,  N.  Y.,  Putnam,  $1.50,  1899,  chap.  8.] 

12.  East   India   Company   in   the   nineteenth   century.      [Willson, 
Ledger  and  sword,  vol.  2,  chaps.   12,  13.] 

13.  Commerce  of  British  India.     [William  W.  Hunter,  The  Indian 
Empire,  third  ed.,  London,  1893,  chap.  19;    same  author,  The  Marquess 
of  Dalhousie,  Oxford,  1890,  chap.  10.] 

14.  The  Hudson's  Bay  Company  in  the  nineteenth  century.    [George 
Bryce,  Remarkable  history  of  the  Hudson's  Bay  Company,  N.  Y.,  Scrib- 
ner's,  1900;   Willson,  The  great  company,  London  (N.  Y.,  Dodd),  1900, 
vol.  2,  chap,  36;   G.  R.  Parkin,  The  great  Dominion,  London,  Macmillan, 
1895,   chap.   8.] 

15.  Slave  plantations  in  the  British  West  Indies.     [A.  K.  Fiske, 
The  West  Indies,  N.  Y.,  1899,  chap.  10;  James  Rodway,  The  West  Indies, 
London  (N.  Y.,  Putnam),  chaps.  7,  10;   F.  W.  Pitman,  Development  of 
the  British  West  Indies,   New  Haven,   1917,  chap.   1.] 

16.  Emancipation  of  the  slaves  and  its  results.    [Rodway,  chaps.  14, 
15.]  • 

17.  Development  of  Australia.     [Encyclopedia;    Helmolt,  Hist,  of 
World,  vol.  2,  p.  252  ff.] 

BIBLIOGRAPHY 

Useful  references  can  be  obtained  on  England,  as  on  other  countries 
to  be  considered  later,  by  consulting  the  Subject  Index  of  the  British 
Museum  Library  for  books  published  since  1881,  and  the  A.  L.  A.  Cata- 
logue for  books  in  print,  of  a  popular  character. 

Of  the  general  histories  of  England  in  the  nineteenth  century,  that  by 
*  Spencer  Walpole,  5  vols.,  London,  Longmans,  1878-86,  devotes  consider- 
able attention  to  economic  developments,  and  is  worth  the  teacher's 
attention.  Justin  McCarthy,  *  History  of  our  own  times,  is  better  suited 


ENGLAND:   COMMERCIAL  DEVELOPMENT,   1800-1850       367 

to  attract  the  student;  it  is  divided  into  short  topical  chapters,  and  written 
in  an  interesting  style.  A  shorter  history  has  been  published  by  McCarthy 
in  the  Story  of  the  Nations  Series,  2  vols.,  N.  Y.,  1899.  The  last  volume 
of  Traill's  Social  England  pays  but  scant  attention  to  commerce. 

Of  smaller  books  that  which  deserves  most  cordial  commendation  to 
students  who  desire  a  description  of  economic  progress  in  its  relation  to 
political  changes  is  Gilbert  Slater,  **  Making  of  modern  England,  London, 
1913,  revised  edition  Houghton,  Mifflin  Co.,  undated. 

The  best  history  of  English  commerce  is  that  of  **  Leone  Levi,  ex- 
tending from  1763  to  1878;  it  is  unfortunately,  out  of  print.  Cunningham 
notices  some  of  the  important  commercial  changes  in  the  first  half  of  the 
century,  but  devotes  most  of  his  last  volume  to  other  topics;  and  the 
smaller  manuals  of  English  economic  history  pay  comparatively  little 
attention  to  commercial  development.  *  Bowley's  small  volume  is  a 
useful  contribution,  noteworthy  for  a  number  of  graphic  charts;  it  is, 
however,  too  statistical  in  treatment  to  serve  the  needs  of  the  ordinary 
reader.  Chapman's  book,  like  Bowley's  an  outgrowth  of  a  successful 
essay  written  for  a  Cobden  prize,  is  confined  to  a  special  aspect  of  the 
trade  with  a  particular  country. 

William  Smart,  *  Economic  annals  of  the  nineteenth  century,  London, 
1910-17,  covering  the  years  1801-1830,  treats  commercial  policy  at  length 
and  the  history  of  commerce  proper  briefly.  The  same  tendency  marks 
Commerce  and  industry,  A  historical  review,  1815-1914,  ed.,  W.  Page, 
London,  1919,  2  volumes,  of  which  the  second,  **  Tables  of  statistics, 
is  a  very  useful  compilation.  Other  statistical  sources,  of  importance  to 
a  student  making  a  careful  study  of  the  subject,  are  Porter,  **  Progress 
of  the  nation  and  M'Culloch,  **  Commercial  dictionary,  of  which  various 
editions  have  been  published.  A  revision  of  Porter  by  F.  W.  Hirst,  London, 
1912,  aims  to  bring  his  statistics  down  to  date. 


CHAPTER   XXXVI 

ENGLAND:   REFORM   OF   COMMERCIAL  POLICY 

430.  Burden  of  tariff  on  trade  and  manufactures.  —  After 
this  survey  of  the  development  of  English  trade  in  the  first 
half  of  the  century  we  must  attend  to  a  most  important  change 
in  English  commercial  policy,  which  lies  mainly  in  this  period. 
We  shall  consider  three  groups  of  topics:  the  reform  of  the 
general  tariff;  the  repeal  of  the  corn  laws,  protecting  agricul- 
tural products,  especially  wheat;  and  the  repeal  of  the  navi- 
gation laws,  protecting  shipping.  — 

England  entered  the  nineteenth  century  with  a  cumbrous 
mass  of  tariff  regulations  inherited  from  the  past,  from  which 
only  the  worst  excesses  had  been  pruned  by  statesmen  like 
Walpole  and  Pitt.  Customs  laws  had  accumulated  for  500 
years  to  the  amount  of  1,500  statutes,  "often  confused,  often 
contradictory,  sometimes  unintelligible."  Hardly  any  ware 
which  was  obtainable  abroad,  whether  it  was  a  raw  material  or 
a  manufactured  product,  escaped  the  duties  levied  under  one 
or  another  of  these  laws.  The  duties  were  heavy  and  were 
enforced  with  unreasoning  severity;  a  man  who  imported  a 
mummy  from  Egypt  was  told  that  it  was  a  non-enumerated 
manufacture,  dutiable  at  nearly  $1,000.  Internal  taxes  reached 
articles  which  escaped  the  customs  tariff.  The  taxes  on  the 
publication  of  books  were  so  heavy  that  they  amounted  on  an 
ordinary  edition  to  one  seventh  of  the  whole  cost,  and  exceeded 
the  remuneration  of  the  author.  The  cotton  manufacturer 
had  to  pay  not  only  an  import  duty  on  his  raw  cotton  (higher 
when  it  was  brought  in  a  foreign  ship);  he  had  to  pay  an 
excise  or  internal  tax  on  calico  which  he  printed;  and  he  had 

368 


ENGLAND:  REFORM  OF  COMMERCIAL  POLICY          369 

to  pay  taxes,  in  one  form  or  another,  on  all  the  important 
materials  he  used  in  manufacture,  —  flour,  starch,  leather, 
soap,  dyestuffs,  paper,  timber,  brick,  tiles.  A  man  could  not 
build  a  factory,  or  run  it,  or  feed  and  clothe  his  workmen, 
without  paying  taxes  at  every  step. 

431.  Prevalence  of  smuggling.  —  A  partial  relief  from  the 
burden  of  the  customs  was  obtained  by  smuggling.     Tariffs 
could  hinder  but  could  not  absolutely  stop  the  natural  move- 
ment of  commodities.     Smuggling  was  a  regular  profession, 
with  a  tariff  modeled  on  the  regular  tariff,  but  enough  lower 
to  invite  business;    the  smuggler's  charge  varied  ordinarily 
from  15  to  40  per  cent  ad  valorem.     Large  numbers  of  the 
common  people  were  leagued  with  the  smugglers  to  defy  the 
law,  and  the  upper  classes,  even  the  legislators  themselves, 
accepted  smuggling  as  a  matter  of  course.    A  member  of  the 
House  of  Commons  once  flourished  his  silk  bandanna  hand- 
kerchief before  the  House,  saying:  "Here  is  a  foreign  ware  that 
is  totally  prohibited.     Nearly  every  one  of  you  has  a  similar 
illicit  article  in  his  pocket.     So  much  for  your  prohibition." 
The  government  framed  its  duties  with  an  eye  to  the  ease  of 
evading  them;    it  laid  a  higher  duty  on  fancy  silks  than  on 
plain,  because  the  smugglers  were  at  a  disadvantage  in  hand- 
ling the  former,  which  had  to  be  brought  in  at  once,  before  the 
fashions  changed,  while  plain  goods  could  wait  the  smuggler's 
convenience. 

432.  Beginning  of  the  reform  movement,  1820.  —  More  and 
more  as  time  went  on,  and  England's  commercial  capacity 
increased,  were  the  evils  and  abuses  of  the  system  appreciated. 
By  1820  the  times  were  ripe  for  a  change,  and  the  movement 
to  reform  was  initiated  in  that  year  by  a  petition  from  a  group 
of  London  merchants.     The  petition  urged  the  principle  of 
free  trade  which  the  economist  Adam  Smith  had  supported  in 
his  "Wealth  of  Nations"  (published  in  1776),  and  prayed  that 
all   restrictive  regulations,   not  imposed  on  account  of  the 
revenue,  including  all  duties  of  a  protective  character,  might 
be  repealed  at  once. 


370  A   HISTORY  OF  COMMERCE 

433.  Reform  of  the  tariff  under  Huskisson.  —  The  early 
stages  of  tariff  reform,  effected  under  the  leadership  of_Hus- 
kisson  about  1825,  included  the  following:    (1)  The  simplifica- 
tion  and  condensation  into  manageable  form  of  the  customs 
laws.    (2)  Reduction  or  removal  of  the  duties  on  raw  materials. 

(3)  Reduction  of  the  duties  on  manufactures,  generally  to  30 
per  cent  or  less,  on  the  principle  that  such  a  duty  was  ample 
for  protection,  if  a  ware  could  be  made  at  home  to  advantage. 

(4)  The  removal  of  most  of  the  restrictions  on  export.    These 
restrictions  had  affected  raw  materials,  partly  manufactured 
goods,  and  even  artisans  themselves.     The  government  had 
tried  to  keep  skilled  workmen  at  home,  but  found  that  it 
merely  made  them  discontented,  forced  them  to  evasions,  and 
kept  them  from  coming  back  when  they  had  once  left  the 
country:  it  left  them  henceforth  free  to  emigrate.    It  was  still 
unwilling  to  allow  machinery  to  be  exported  freely,  for  fear 
that  other  countries  would  build  up  a  competition  in  manu- 
factures, but  it  recognized  the  difficulty  of  making  its  restric- 
tions effective,  and  relaxed  them  greatly. 

434.  Results  and  later  completion  of  the  reform.  —  The 
results  of  the  reform  exceeded  anticipations.     Not  only  did 
those  industries  benefit  which  (like  cotton,  for  instance)  had 
previously  been  taxed  for  the  support  of  others,  but  the  pro- 
tected industries  themselves  gained  by  the  revision  of  the 
laws.    The  export  of  woolen  stuffs  increased  rapidly  after  the 
removal  of  the  prohibition  on  the  export  of  raw  wool.     The 
silk  manufacture,  which  had  made  slow  progress  and  secured 
only  a  small  market  under  the  system  of  high  duties  and 
prohibitions,  advanced  more  rapidly  now  in  a  decade  than  it 
had  done  before  in  a  century. 

The  work  of  reform  was,  however,  still  far  from  complete; 
the  tariff  retained  many  incongruities  and  was  felt  still  to  be 
oppressive  by  the  business  interests  of  the-  country.  The 
second  stage  in  the  advance  to  free  trade  was  effected  under 
Sir  Robert  Peel,  who  in  1842  secured  the  reduction  of  duties 

l^*W^fci^^^  ^^^^^••••••••H 

on  750  articles,  and  in  1845  abolished  430  out  of  a  total  of 


ENGLAND:  REFORM  OF  COMMERCIAL  POLICY          371 

813  import  duties.  Peel's  reforms  left  still  a  considerable 
element  of  protection  in  the  tariff,  and  the  final  acceptance  of 
free  trade  waited  till  Gladstone's  laws  of  1853  and  1860,  which 
lowered  and  then  swept  away  import  duties  T>y  the  hundred, 
and  left  the  English  tariff  substantially  in  its  present  shape. 
The  system  of  "free  trade"  which  England  has  since  maintained 
does  not  imply  a  complete  lack  of  import  duties;  more  than 
one  fifth  of  the  total  revenue  from  taxes  is  now  yielded  by 
the  customs.  Import  duties,  however,  have  been  restricted 
to  a  very  few  commodities,  and  are  "revenue,"  not  "protec- 
tive" duties,  in  the  sense  that  they  do  not  encourage  the 
production  in  England  of  anything  which  can  be  produced 
more  cheaply  abroad. 

435.  The  corn  laws  and  their  effects.  —  Previous  to  the 
great  changes  which  turned  England  into  a  manufacturing 
country,  the  agricultural  interests  which  controlled  Parliament 
had  assured  themselves  a  good  measure  of  protection  in  framing 
the  tariff  laws.  The  importation  of  grain  was  prevented  by 
high  duties;  and  the  export  was  favored  by  bounties  when  the 
supply  was  relatively  plentiful  and  the  price  fell  below  about 
$1.50  a  bushel.  Export  became  more  and  more  rare  as  the 
home  demand  for  foodstuffs  grew  with  the  increase  in  the 
industrial  population;  and  toward  the  close  of  the  eighteenth 
century  it  became  ever  a  more  serious  question  whether  Eng- 
land could  produce  at  home  sufficient  food  for  her  growing 
people.  An  attempt  was  made  to  arrange  the  laws  so  as  to 
keep  the  price  of  wheat  steady  at  about  48s.  a  quarter  ($1.50 
a  bushel),  but  the  laws  did  not  succeed  in  preventing  violent 
fluctuations  in  the  price.  At  the  close  of  the  great  wars,  in 
1815,  English  agriculturists  demanded  a  continuance  of  the 
protection  which  the  stoppage  of  commerce  had  afforded  them 
and  the  import  of  foreign  wheat  was  prohibited  so  long  as  the 
price  at  home  did  not  rise  above  80s.  (about  $2.50  a  bushel, 
or  about  $.30  for  the  quartern  loaf  of  bread).  Landlords  got 
high  rents  as  a  result,  but  farmers  who  leased  their  land  suffered 
when  prices  fell  to  a  reasonable  level,  and  consumers  were 


372  A  HISTORY  OF  COMMERCE 

forced  to  pay  extortionate  prices  for  a  prime  necessity.  Hun- 
dreds of  thousands  of  the  working  classes  were  brought  to  the 
verge  of  starvation  in  1817  by  the  price  of  wheat  rising  to 
112s.  (about  $3.50  a  bushel). 

436.  Movement  of  English  manufacturers  for  a  repeal  of 
the  corn  laws.  —  The  House  of  Commons,  even  after  the  elec- 
toral reform  of  1832,  afforded  but  little  representation  to  the 
manufacturing  and  mercantile  classes;  four  fifths  of  its  members 
belonged  to  the  landed  interests,  and  though  they  made  some 
slight  concessions  they  refused  to  grant  adequate  relief.    It 
was  necessary  for  the  opposition,  which  organized  under  the 
name  of  the  Anti-Corn-Law  League,  to  carry  on  its  campaign 
outside  of  Parliament;   it  could  report,  at  the  annual  meeting 
of  1843,  that  nine  million  tracts  had  been  distributed,  and 
meetings  had  been  held  in  140  towns.     Inside  of  Parliament 
the  movement  engaged  the  energies  of  orators  like  .Cobden 
and  Bright,  who  saw  in  it  a  question  of  life  and  death  for 
English  manufactures.     How  was  the  manufacturer  to  pay 
the  wages  which  such  a  costly  food  supply  required?     To 
whom  was  he  to  sell  his  goods  when  so  large  a  proportion  of 
English  incomes  had  to  be  expended  for  bare  necessaries,  and 
when   England  refused  to  take  from  foreign   countries  the 
commodities  which  they  offered  in  exchange?     Even  among 
the  agricultural  classes  the  landlords  were  the  sole  gainers. 
The  agricultural  laborers  were  wretchedly  poor;    Cobden  as- 
serted that  none  of  them  spent  more  than  about  $7.50  a  year 
in  manufactured  articles,  if  shoes  were  excepted,  and  that 
they  bought  a  smaller  amount  of  English  manufactures  than 
the  people  of  Brazil. 

437.  Repeal  of  the  corn  laws  and  its  significance.  —  With 
the  passage  of  time  and  with  the  growth  of  the  industrial 
population  conditions  changed  from  bad  to  worse.    The  com- 
bination of  a  bad  harvest  and  bad  times  in  business  in  1841 
forced  thousands  of  the  manufacturing  population  to  seek 
poor  relief,  while  other  thousands  were  estimated  to  be  earning 
on  the  average  less  than  a  shilling  a  week.    It  needed  only  a 


ENGLAND:  REFORM  OF  COMMERCIAL  POLICY          373 

shock  like  that  given  by  the  crop  failure  in  the  first  year  of 
the  Irish  famine,  1845,  to  force  the  change  which  had  come 
gradually  to  be  recognized  as  inevitable.  Peel's  act  of  1846 
left  a  slight  protection  for  a  few  years;  but  after  1849  only  a 
nominal  duty  was  to  remain,  and  even  this  was  abolished  later. 

The  repeal  of  the  corn  laws  was  a  momentous  act  in  English 
history.  It  marks  the  formal  and  final  recognition  that  Eng- 
land had  grown  from  an  agricultural  to  an  industrial  and 
commercial  state.  It  threw  England,  as  an  English  economist 
said,  from  corn  to  coal  as  the  staple  product  of  the  country. 
Manufactures  and  trade  thenceforth  developed  freely.  Even 
the  agricultural  interest  gained  in  ways  which  it  had  not 
foreseen:  the  consuming  population  increased  rapidly  both  in 
numbers  and  in  purchasing  power,  and  demanded  increasing 
quantities  of  meat,  dairy  produce,  vegetables,  and  fruit.  The 
full  effect  of  the  change  on  commerce  will  be  apparent  when 
we  review  the  history  of  the  last  half  of  the  century. 

438.  Reform  of  the  navigation  acts.  —  This  survey  of  the 
course  of  English  policy  in  the  first  half  of  the  nineteenth 
century  will  be  closed  by  the  consideration  of  a  third  topic, 
the  laws  protecting  shipping.  Reference  to  a  previous  chapter 
will  show  how  severe  were  the  restrictions  meant  to  prevent 
the  competition  of  foreign  shipping,  in  the  seventeenth  and 
eighteenth  centuries.  The  period  now  under  consideration  was 
marked  by  the  removal  of  all  these  restrictions,  and  by  a  great 
growth,  notwithstanding,  in  the  English  merchant  marine. 

The  establishment  of  the  independence  of  the  United  States, 
and  later  of  the  Spanish  American  republics,  overthrew  the 
colonial  theory  on  which  many  of  the  navigation  acts  were 
based,  and  forced  numerous  revisions.  The  long  wars  of  the 
Napoleonic  period,  also,  led  England  to  grant  privileges  to 
neutral  powers  in  the  carrying  trade.  Important  breaches, 
therefore,  had  been  made  in  the  old  system  before  the  century 
was  far  advanced,  and  it  was  in  no  condition  to  withstand  the 
assaults  directed  against  it  by  people  both  abroad  and  at 
home  whose  interests  it  injured.  The  United  States  adopted 


374  A   HISTORY  OF  COMMERCE 

a  policy  of  reprisal  which  forced  England  to  admit  American 
ships  freely  to  English  ports,  and  threats  of  similar  action  by 
European  countries  led  in  1824  and  the  years  immediately 
following  to  a  series  of  treaties  putting  foreign  ships  on  an 
equality  with  English. 

439.  Final  repeal  of  the  navigation  acts.  —  The  navigation 
acts  had  grown  into  a  most  complicated  system,  and  it  is 
impossible  to  describe  in  detail  their  gradual  relaxation.  By 
1830  English  ships  had  lost  all  their  privileges  except  in  the 
coasting  trade,  and  in  the  trade  with  and  between  the  colonies. 
Even  this  amount  of  protection  came  to  be  regarded  as  a  burden 
not  only  on  commerce  but  on  shipping  itself,  and  was  abolished 
in  1849  and  1854.  Every  step  in  the  reform  of  the  navigation 
acts  was  bitterly  fought  by  adherents  of  the  old  system,  who 
prophesied  ruin  to  English  shipping  if  it  were  denied  protection 
and  left  to  make  its  own  way.  How  groundless  were  the 
fears  of  those  who  opposed  reform  can  be  seen  in  the  following 
table,  giving  in  millions  the  tonnage  of  English  ships  in  the 
period  1800-1850:  1800,  1.6;  1810,  2.2;  1820,  2.4;  1830,  2.2; 
1840,  2.5;  1850,  3.5. 

QUESTIONS  AND  TOPICS 

1.  Are  all  taxes  of  equal  amount  equally  burdensome?     Would  a 
country  fare  as  well  if  it  raised  its  revenue  by  taxing  saws  and  chisels 
instead  of  cigarettes  and  playing  cards? 

2.  What  are  the  effects  of  smuggling  on  (a)  the  public  revenue,  (6) 
honest  merchants,    (c)  consumers? 

3.  How  do  the  rates  of  the  English  tariff,  as  established  at  this  time, 
compare  with  the  rates  of  the  present  tariff  of  the  United  States? 

4.  On  what  articles  are  import  duties  still  levied  in  Great  Britain? 
[See  Statesman's  Year-Book,  index,  Great  Britain,  customs.] 

5.  The  corn  laws  and  their  effects.    [Morley,  Cobden,  chap.  7;  Rand. 
EC.  hist.,  chap.  9.] 

6.  English  agriculture  under  the  corn  laws.     [Traill,  Soc.  England, 
6:  75-84,  211-217.] 

7.  The  agitation  for  repeal  of  the  corn  laws.     [McCarthy,  vol.  1, 
chap.  14;    Morley,  Cobden,  chap.  6.] 

8.  The  repeal  of  the  corn  laws.    [McCarthy,  vol.  1,  chap.  15.] 


ENGLAND:    REFORM   OF   COMMERCIAL    POLICY      375 

9.  English  agriculture  after  the  repeal.     [Traill,  Soc.   England,  6: 
404-421,  599-607.] 

10.  What  were  the  main  features  of    the  navigation   acts?      [See 
above,  sect.  358,  or  study  the  main  provisions  in  Rand,  EC.  hist.,  appen- 
dix 1.] 

11.  Conditions  at  the  time  when  the  Acts  were  repealed.    [Lindsay, 
vol.  3,  chap.  6.] 

12.  Development  of  the  merchant  marine.     [Traill,  Soc.  England, 
6:  392-404;    Ward,  Reign,  2:  111-118.] 


BIBLIOGRAPHY 

The  best  single  source  on  the  topics  of  this  chapter  is  Bernard  Holland, 
**The  fall  of  protection,  1840-1850,  London,  1913.  Of  more  compre- 
hensive and  more  elementary  books  may  be  mentioned  Mongredien, 
*  History  of  the  free-trade  movement,  and  Armitage-Smith,  **  Free-trade 
movement,  which  is  well  suited  to  topical  assignent.  Similar  in  scope 
is  W.  Cunningham,  **  Free-trade  movement,  with  concluding  chapters 
on  recently  projected  changes. 

The  best  account  of  the  corn  laws  is  to  be  found  in  Morley's  **  Life 
of  Cobden,  and  George  Macaulay  Trevelyan's  **  Life  of  John  Bright, 
London,  1913.  Graphic  pictures  of  conditions  of  life  under  the  corn  laws 
are  provided  by  The  hungry  forties:  life  under  the  bread  tax,  London, 
1904;  and  J.  K.  Snowden's  Corn  law  memories,  in  Con  temp.  Review, 
1905,  88:  64-71.  J.  S.  Nicholson,  *  History  of  the  English  corn  laws, 
London,  1904,  is  a  thoughtful  study  in  brief  compass,  but  is  not  suited 
to  topical  reading. 

The  navigation  acts  are  treated  by  Holland,  and  at  considerable  length 
in  the  third  volume  of  Lindsay.  The  best  recent  contributions  on  the 
subject  are  in  periodical  literature:  John  Rae,  **  English  shipping  under 
protection,  in  Contemporary  Review,  1905,  87:  666-675;  J.  H.  Clapham, 
**  The  last  years  of  the  navigation  acts,  English  Hist.  Rev.,  1910,  25: 
480-501,  687-707. 


CHAPTER   XXXVII 

ENGLAND:    COMMERCIAL  DEVELOPMENT,   1850-1914 

440.  Development  of  English  commerce  since  1850.  —  An 
accompanying  table  sets  forth  the  course  of  English  trade 
down  to  the  outbreak  of  the  World  War.    The  figures  refer,  as 
in  the  previous  table,  to  imports  for  consumption  in  the  coun- 
try, and  to  exports  of  British  and  Irish  produce.    To  indicate, 
however,  the  share  of  commerce  which  the  English  enjoyed 
merely  as  middlemen  I  add  a  column  of  re-exports,  foreign 
and  colonial  wares  imported  but  shipped  away  again.    If  the 
amount  of  these  wares  be  doubled  (since  they  figure  both  as 
imports  and  exports),  and  added  to  the  other  items,  the  sum 
gives  the  gross  foreign  trade  (excluding  that  in  precious  metals). 
The  system  of  valuation  of  imports  changed  in  1854;    under 
the  old  system  of  "official"  values  the  imports  of  that  year 
would  have  been  entered  at  twenty-eight  million  pounds  less 
than  under  the  new  system  of  giving  the  "real"  values.    This 
table,  therefore,  is  not  directly  comparable  with  the  table  of 
the  preceding  chapter;    and  to  remind  the  student  of  this  I 
have  left  a  few  years  vacant,  making  a  gap  between  the  two 
tables. 

441.  Importance   of  England   and   of  British   Empire   in 
trade  of  the  world.  —  A  mere  glance  at  this  table  will  be 
sufficient  to  show  the  progress  that  has  been  made  since  1850. 
Some  idea  of  the  importance  of  this  trade,  not  only  to  England 
but 'to  the  world  at  large,  can  be  gathered  from  the  fact  that  it 
amounted,  about  the  middle  of  the  period,  to  nearly  one-fourth 
(23  per  cent)  of  the  estimated  total  foreign  trade  of  the  world, 
and  at  the  close  of  the  period,  (1912),  in  spite  of  the  commercial 
progress  of  other  countries,  it  was  still  one-sixth.     If  we  ex- 

376 


ENGLAND:  COMMERCIAL  DEVELOPMENT,   1850-191^       377 

ANNUAL  AVERAGE  TRADE  OF  THE  UNITED  KINGDOM,  IN  MILLIONS, 
STERLING,  WITH  ROUGH  EQUIVALENTS  IN  MILLIONS  OF  DOLLARS 


Imports 

Exports 

Re-exports 

d 
1855-59  

£146 
193 
237 
291 
320 
344 
318 
357 
393 
466 
522 
611 

$730 
965 
1185 
1455 
1600 
1720 
1590 
1785 
1965 
2330 
2610 
3055 

£116 
138 
181 
235 
202 
234 
226 
234 
238 
289 
377 
474 

$580 
690 
905 
1175 
1010 
1170 
1130 
1170 
1190 
1445 
1885 
2370 

£23 
42 
49 
55 
55 
64 
61 
62 
60 
67 
85 
107 

1860-64  

1865-69  

1870-74  

1875-79  

1880-84  

1885-89  

1890-94  

1895-99  

1900-04  

1905-09  

1910-13  

tend  our  view  to  embrace  not  only  the  little  islands  in  the 
North  Sea,  but  all  the  countries  depending  on  them  and  form- 
ing the  British  Empire,  we  find  the  trade  of  this  group  over 
one-fourth  of  the  trade  of  the  world. 

A  survey  which  omits  from  consideration  trade  across  land- 
frontiers,  and  considers  only  sea-borne  trade,  is  even  more 
impressive.  Of  the  total  sea-borne  trade  of  the  world  in  1912 
it  is  estimated  that  15%  (in  value)  was  between  countries 
within  the  British  Empire,  and  39  %  was  between  the  Empire 
and  foreign  countries.  Thus  the  trade  of  which  one  or  both 
terminals  lay  within  the  Empire  was  over  half  of  the  maritime 
trade  of  the  world.  The  trade  of  which  one  terminal  was  in 
the  United  Kingdom  amounted  by  itself  to  about  40  %  of  the 
world's  total  sea-borne  trade. 

442.  Chief  causes  of  the  rapid  development  of  English 
commerce.  —  The  causes  of  this  development  may  be  sum- 
marized briefly  as  follows:  (1)  The  English  people  were  the 
most  advanced,  in  industrial  and  mercantile  ability,  of  any 
people  in  the  world.  They  had  the  start  on  others  in  manu- 
factures and  trade,  and  reaped  the  benefits  of  their  early 


378  A  HISTORY  OF  COMMERCE 

training  in  this  period.  (2)  The  geographical  situation  of 
England,  and  the  physical  resources  of  the  country,  especially 
its  coal,  made  the  English  superior  to  most  peoples  and  equal 
to  any,  in  this  age  of  transportation  and  manufacture  by 
steam.'  (3)  The  commercial  policy  of  the  government  allowed 
the  people  to  make  the  most  of  their  advantages.  Toward 
the  close  of  the  eighteenth  century  an  English  statesman  had 
told  Benjamin  Franklin  of  his  idea  "  to  make  England  a  free 
port,  for  which  he  said  the  English  were  especially  fitted  by 
nature,  capital,  love  of  enterprise,  maritime  connections,  and 
position  between  the  old  and  new  world,  and  the  north  and 
south  of  Europe,  and  that  those  who  were  best  circumstanced 
for  trade  could  not  but  be  gainers  by  having  trade  open." 
This  idea  waited  long  for  its  realization,  but  on  that  account 
led  to  the  more  rapid  progress  when  it  was  carried  into  effect. 
Within  five  years  of  the  repeal  of  the  corn  laws  exports  rose 
fifty  to  one  hundred  million  pounds  sterling  per  annum;  manu- 
factures and  trade  developed  by  leaps  and  bounds.  Free  trade 
alone  cannot  be  credited  with  all  the  progress  that  England  made 
in  this  period.  It  was,  perhaps,  the  least  of  the  three  factors 
enumerated,  but  still^  it  was  of  such  importance  that  the  other 
two  factors  would  have  been  of  much  less  effect  without  it. 

443.  Character  of  English  exports.  —  This  trade  had  now  in 
a  more  pronounced  form,  the  characteristics  which  it  had  been 
gradually  assuming  and  which  make  it  one  of  the  most  remark- 
able examples  of  advanced  commerce  in  the  world.    Consider- 
ing first  the  exports,  we  find  that  over  three-fourths  of  them 
(in  value)  have  consisted  of  wares  wholly  or  mainly  manufac- 
tured.   Only  one  raw  material  has  gone  out  in  great  quantity; 
this  is  coal,  which  has  contributed  about  one-tenth  of  the  total 
value  of  exports.     Aside  from  coal  few  wares,  and  those  of 
relatively  slight  importance,   have  left  the  islands  in  their 
crude  form. 

444.  Leading  items  among  the  exports.  —  Cotton  manu- 
factures kept  their  place  at  the  head  of  the  list  of  exports, 
comprising  about  one  quarter  of  the  total.    England  in  1913 


ENGLAND:  COMMERCIAL  DEVELOPMENT,   1850-1914       379 

exported  the  enormous  sum  of  over  seven  thousand  million 
yards  of  cotton  cloth  a  year.  The  exports  of  iron  and  steel 
and  their  products  rose  in  this  period  to  the  second  place; 
England  was  now  purveying  to  other  nations  the  means  of 
raising  the  structure  on  which  modern  manufactures  and 
transportation  are  based.  The  growth  in  the  exports  of  ma- 
chinery is  especially  striking;  this  item  increased  over  fivefold 
within  the  fifty  years  to  1900,  and  doubled  again  in  the  short 
period  before  the  outbreak  of  the  war.  Below  these  leading 
items  come  others  with  which  we  are  already  familiar  (woolen 
and  linen  manufactures)  and  some  which  had  gained  pro- 
motion on  the  list  of  exports;  leather  goods,  chemicals,  jute 
manufactures,  pottery,  etc. 

445.  Imports;    prominence  of  foodstuffs.  —  The  fact  sug- 
gested by  the  list  of  exports,  that  England  has  specialized  more 
and  more  in  manufactures,  is  borne  out  by  the  list  of  imports 
during  the  past  half  century.    Since  the  adoption  of  the  free- 
trade  policy  the  English  people  has  been  freed  from  depend- 
ence on  the  home  supply  of  food  and  has  supplied  its  neces- 
sities by  purchases  abroad.     Among  the  imports,  therefore, 
we  find  that  the  largest  item  is  that  of  foodstuffs,  which  has 
grown  rapidly  both  in  its  absolute  value  and  in  its  proportion 
of  the  total  imports.     In  contrast  with  the  medieval  period, 
when  only  luxuries  like  wines  and  spices  could  pay  for  their 
transportation,  we  find  now  the  great  food  staples  flowing 
to  England  from  countries  thousands  of  miles  distant.     Im- 
provements in  transportation,   due  especially  to  the  use  of 
steam,  have  enabled  bulky  cargoes  to  pay  for  their  passage, 
and  the  weight  of  the  imports  in  tons  has  increased  much 
more  rapidly  than  their  value.     Improved  means  of  trans- 
portation and  preservation  have  moreover  enabled  the  English 
to  import  perishable  articles  like  meat,  fruits,  and  vegetables, 
and  dairy  products;    and  the  imports  of  these  wares  have 
increased  from  ten  to  twentyfold  in  weight. 

446.  Imports  of  raw  materials  and  manufactures.  —  The 
same  conditions  have  affected  the  imports  of  raw  materials. 


380  A   HISTORY  OF  COMMERCE 

A  century  ago  the  manufacture  of  iron  from  imported  ore 
would  have  been  thought  an  absurdity,  but  it  has  become  a 
regular  practice  now  that  freights  are  so  low;  and  the  import 
of  minerals  is  a  respectable  item  in  a  list  in  which  the  raw 
materials  for  the  textile  industry  are  still,  of  course,  most 
important.  Free  trade  encouraged  also  a  great  increase  in  the 
imports  of  manufactures,  which  grew  nearly  tenfold  in  the  fifty 
years  to  1900,  though  they  still  were  less  important  than  food- 
stuffs and  raw  materials.  The  largest  item  among  them  after 
the  crude  metals,  was  silk,  for  the  manufacture  of  which  other 
nations  have  always  shown  more  aptitude;  but  the  list  included 
woolens,  hardware,  leather  (boots  and  shoes),  paper,  and  many 
other  items. 

447.  Explanation  of  the  excess  of  imports  over  exports.  — 
A  feature  of  England's  foreign  trade  deserving  comment  and 
explanation  is  the  great  excess  of  imports  over  exports.    It  is 
natural  to  expect  that  these  two  items,  which  seem  to  represent 
the  two  sides  of  a  balance  sheet,  should  be  nearly  equal  to 
each  other;  but  in  fact  the  value  of  exports  has  for  many  years 
been  far  below  that  of  imports,  and  the  difference  in  the  years 
toward  1900  amounted  to  the  enormous  total  of  $700,000,000 
to  $900,000,000  a  year. 

England  did  not  receive  this  surplus  of  goods  as  a  gift, 
but  earned  it  by  services  in  the  past  and  in  the  present  which 
put  other  countries  under  obligations  to  her.  The  English 
had  invested  enormous  sums  abroad,  and  had  the  right  there- 
fore to  interest  and  dividends;  their  merchant  marine  did  a 
large  part  of  the  carrying  trade  of  the  world,  and  naturally 
had  a  large  bill  for  freight  to  render  to  other  people;  London 
was  the  financial  center  of  the  world,  and  made  the  foreigner 
pay  tribute  for  the  services  and  commissions  executed  for  him. 
There  were  some  items  on  the  other  side  of  the  account,  but 
on  the  whole  England  had  the  right  every  year  to  take  from 
other  countries  in  the  form  of  goods  vastly  more  than  she 
exported  to  them. 

448.  Detailed  items  in  England's  international  balance.  — 
The  items  which  go  to  make  up  the  credits  and  debits  of  Eng- 


ENGLAND:   COMMERCIAL  DEVELOPMENT,   1850-1914      381 

land  in  relation  to  other  countries  may  be  set  forth  in  the  form 
of  a  balance  sheet,  as  in  the  table  below,  which  gives  the  esti- 
mate of  these  items  for  the  year  1910.  Figures  are  given  in 
round  millions  of  pounds  sterling. 

Credits  Debits 

Exports  of  merchandise 430  Imports  of  merchandise .  .     678 

Re-exports  (foreign  mdse.) 103  Imports  of  bullion 71 

Exports  of  bullion 64 

Income  from  investments 178  Capital  invested  abroad. .     170 

Earnings  of  shipping 100 

Banking  and  business  earnings. .  55  Earnings  due  foreigners.  .       15 

931  934 

The  students  should  note  several  characteristic  features 
of  this  balance  sheet.  (1)  Only  the  items  at  the  head  of  the 
columns  are  measured  accurately:  the  others  are  "invisible" 
items,  represented  only  by  pieces  of  paper  passing  through 
the  mail,  but  these  are,  pound  for  pound,  of  equal  importance. 
(2)  The  inflow  and  outflow  of  bullion  are  large  items,  but  nearly 
balance;  England  has  acted  as  a  clearing  house  for  the  pay- 
ments of  the  world's  debts,  and  the  distribution  of  the  world's 
gold.  (3)  In  this  period  England  re-invested  in  other  countries 
most  of  the  great  sum  due  in  interest  and  dividends.  The 
English  investor  may  be  pictured  as  receiving  a  dividend 
check  from  the  United  States  or  South  America,  and  as  mailing 
it  back  instead  of  cashing  it,  asking  that  it  be  added  to  the 
capital  sum  of  his  investment. 

449.  Growth  of  the  merchant  marine.  —  England  was  the 
leader  among  nations  in  the  carrying  trade  in  1850,  and  re- 
tained her  position  still  unchallenged  at  the  close  of  the  cen- 
tury. At  the  outbreak  of  the  war  in  1914  nearly  half  of  the 
world's  steam  tonnage  was  under  the  British  flag;  the  tonnage 
of  Germany,  which  came  second  on  the  list  of  countries,  was 
not  one-fourth  of  the  British.  The  number  of  ships  in  the 
English  merchant  marine  has  actually  decreased  in  this  period 
of  progress,  but  the  carrying  capacity  has  grown  immensely 


382  A  HISTORY  OF  COMMERCE 

by  the  increase  in  size  of  the  ships  and  by  the  substitution  of 
steam  for  sailing  vessels.  It  will  be  remembered  that  the 
protection  afforded  by  the  navigation  acts  was  removed  before 
the  beginning  of  this  period.  The  government  has  made 
generous  payments  for  the  carriage  of  mails,  but  still  has  re- 
fused to  pay  regular  subsidies  or  bounties  for  the  encourage- 
ment of  shipping.  English  shipping,  nevertheless,  has  held  its 
own.  Of  the  steam  shipping  built  in  the  twenty  years  pre- 
ceding the  war,  two-thirds  were  built  in  the  United  Kingdom, 
and  over  one-half  was  built  to  sail  under  the  British  flag. 
While  soon  after  1850  the  English  merchant  marine  carried  not 
much  more  than  half  of  the  foreign  commerce  of  the  country, 
the  proportion  grew  in  later  years  to  two-thirds  and  nearly 
three-quarters.  This  proportion  declined  somewhat  in  more 
recent  years,  under  the  competition  of  Continental  steamers, 
but  it  is  estimated  that  in  1913  British  shipping  carried  over 
one-half  of  the  total  sea-borne  trade  of  the  world,  including 
nine-tenths  of  the  trade  inside  the  Empire,  nearly  two-thirds 
of  the  trade  between  the  Empire  and  foreign  countries,  and 
nearly  one-third  (30  %)  of  the  trade  between  foreign  countries. 
450.  Relative  rank  of  English  ports.  —  The  great  commerce 
of  the  United  Kingdom  was  very  unequally  distributed  among 
its  parts,  nine-tenths  of  it  going  to  England  and  Wales  and 
most  of  the  remainder  to  the  lowlands  of  Scotland.  London 
still  kept  its  place  as  the  chief  port  not  only  in  the  United 
Kingdom  but  in  the  world,  mainly  by  reason  of  its  import 
trade;  it  was  exceeded  in  the  amount  of  exports  by  the  second 
port,  Liverpool,  which  distanced  all  rivals  in  the  important 
trade  with  the  United  States.  An  immense  gap  separated 
these  two  leading  ports  from  the  others,  Hull,  Manchester, 
Glasgow,  Southampton,  etc.  Ports  whose  names  were  famous 
in  the  Middle  Ages  and  even  in  later  times  have  dropped  into 
obscurity,  with  fortunate  exceptions  like  Harwich  and  Grimsby, 
which  have  recovered  their  positions  in  recent  times.  Their 
places  were  taken  by  ports  from  which  cotton  and  coal  products 
are  shipped :  Manchester,  once  an  inland  village  but  now  united 


ENGLAND:    COMMERCIAL    DEVELOPMENT,    1850-1914      383 

with  the  sea  by  a  ship  canal  and  standing  (1913)  fourth  on  the 
list,  the  Tyne  ports,  Cardiff,  etc. 

The  importance  of  ports  was  measured  in  the  preceding 
paragraph  by  the  value  of  the  cargoes  imported  and  exported 
through  them.  While  this  appears  to  be  the  best  standard 
by  which  to  determine  commercial  ranking  it  is  proper  also  to 
-consider  not  the  value  of  cargoes,  but  the  volume  of  shipping 
•entering  and  clearing  from  a  given  port.  Measured  by  the 
tonnage  of  vessels  London  was  but  little  superior  to  Liverpool 
before  the  World  War,  was  inferior  to  New  York  and  to  Ham- 
burg, and  about  even  with  Rotterdam  and  Antwerp. 

451.  Relative  share  of  different  countries  in  England's 
commerce.  —  Taking  up  now  the  direction  of  England's  trade 
abroad  and  the  changes  in  its  course  during  the  last  half  of 
the  century,  we  find  ourselves  approaching  questions  which 
have  roused  acute  political  controversy.  Reserving  for  future 
consideration  changes  which  have  shown  themselves  in  the 
most  recent  period  we  may  note  conditions  as  they  were  about 
1900.  England  still  found  the  trade  with  her  European  neigh- 
bors the  most  important  part  of  her  commerce,  making  up 
about  two-fifths  of  the  whole;  this  trade  had  increased  by  over 
one-half  during  the  last  forty  years  of  the  century.  Next  in 
importance  to  it  was  the  trade  with  the  British  dependencies, 
a  little  less  than  one-quarter  of  the  whole,  which  had  increased 
somewhat  more  slowly.  In  the  third  place  we  may  put,  not 
a  continent  or  group  of  countries,  but  one  country,  the  United 
States,  between  which  and  England  the  trade  was  greater  than 
between  any  other  two  countries  on  earth.  England  bought 
from  the  United  States  in  1901  more  than  twice  as  much  as 
she  bought  from  the  next  largest  seller  (France) ;  and  she  sold 
the  United  States  in  that  year  more  than  she  sold  to  all  the 
'Countries  embraced  in  her  great  Empire.  This  part  of  English 
trade,  moreover,  had  grown  more  rapidly  than  any  other, 
increasing  by  once  and  a  half  in  the  period.  Grouping  together 
all  countries  beside  those  enumerated,  we  find  that  the  trade 
with  them  had  remained  nearly  stationary,  and  amounted 
only  to  about  one-eighth  of  the  total. 


384  A  HISTORY  OF  COMMERCE 

QUESTIONS   AND  TOPICS 

1.  Treat  the  statistics,  sect.  440,  by  graphic  representation,  in  the 
manner  that  has  already  been  suggested. 

2.  Compare  the  resons  given  for  the  increase  of  British  commerce 
with  reasons  that  may  suggest  themselves  to  you  for  the  growth  of  the 
commerce  of  the  United  States.     [See  sect.  320  for  a  reference  to  Glad- 
stone's views.] 

3.  The  following  list  gives,  in  million  pounds,  the  value  of  the  chief 
exports  of  home  produce  in  1900:  cotton  manufactures  62.0,  do.  yarn  7.7, 
woolen  manufactures  15.6,  do.  yarn  6.1,  linens  and  yarn  7.1,  jute  and  yarn 
2.4,  apparel  and  haberdashery  6.8,  ships  8.6,  iron  and  steel  32.0,  hardware 
and  cutlery  2.1,  copper  2.9,  machinery  19.6,  coal,  etc.,  38.6,  chemicals  9.2. 
Total  exports  of  home  produce  291.4,  exports  of  foreign  and  colonial 
produce  63.0,  grand  total  354.5.     Treat  the  figures  as  suggested  under 
sect.  419.    [The  figures  are  from  the  preliminary  report  for  1900,  States- 
man's Year-Book,  1901,  pp.  85,  87;  details  of  iron  and  steel  exports  will  be 
found  p.  88.] 

4.  Development  of  the  iron  industry.    [Jeans,  The  iron  trade  of  Great 
Britain,  London,  1906,  or  in  Ashley,  Brit.  Industries,  2-37;  Bell  in  Ward 
Reign,  2:  196-237;    Lady  Bell,  At  the  works,  London,  1907.] 

5.  Development  of  the  textile  industry.    [Soc.  England,  6:  589-599.] 

6.  The  cotton  industry.    [Slagg  in  Ward,  Reign,  2:153-195;   Helm  in 
Ashley,  68-92;   S.  J.  Chapman,  The  cotton  industry  and  trade,  London, 
1905.] 

7.  The  woolen  and  worsted  industries.     [Hooper  in  Ashley,  93-119; 
Graham  in  Lectures,  chap,  10;  J.  H.  Clapham,  The  woollen  and  worsted 
industries,  London,  1907.] 

8.  Linen  and  flax.     [Patterson  in  Ashley,   120-150.] 

9.  Pottery.     [Soc.  England,  6:  379-392.] 

10.  England  as  a  wheat  market.     [Edgar,  Story,  chap.  5.] 

11.  The  food  supply  of  London.     [Quarterly  Review,  Oct.,   1899, 
190:  467-486;    Jan.,  1900,   191:  117-137.] 

12.  England's  food  supply  in  time  of  war;   need  of  the  navy.    [H. 
Seton-Karr  in  North  Amer.  Rev.,  1897,  164:  651-663;    W.  E.  Bear  in 
National  Rev.,  1896,  27:  133-144;     Quarterly  Review,   1905,  203-572- 
598.] 

13.  Project  of  national  granaries  for  storing  a  supply  of  food.    [R.  B. 
Marston  in  Nineteenth  Century,  1898,  43:  879-889;    Yerburgh  hi  Nat. 
Rev.,  1896;    27:  197-207.] 

14.  British  capital  abroad  and  the  balance  of  trade.     [Mulhall  in 
No.  Amer.  Rev.,   1899,  168:  499-505;    Crammond  in  Quarterly  Rev., 
1911;  215:  43-67;  C.  K.  Hobson,  The  export  of  capital,  London,  1914.] 


ENGLAND:    COMMERCIAL   DEVELOPMENT,    1850-1914      385 

15.  Development  of  the  merchant  marine.     [Ginsburg  in  Ashley, 
173-195;    Taylor  in  Forum,   1900-01,  30:  463-477.] 

16.  British  shipping  subsidies.     [Root  in  Atlantic,  1900,  85:    387- 
394.] 

17.  Growth   of   British   ports.     [Ackland   in   Nineteenth   Century, 
1897,  42:  411   ff.;   Browne  in  Contemp.  Rev.,  Feb.  1918,  113:  190-199.] 

18.  The  port  of  London  and  improvements.     [Owen  in  Lectures, 
chap.  4;  Quarterly  Rev.,  1903,  197:  252-269;  Marchant  in  National  Rev., 
1902-3,  40:    715-737, 'with  map;    Miller  in  Fortnightly  Rev.,  1902,  78: 
796-805.] 

19.  The  supply  of  British  seamen.     [Cowie  in  Contemp.  Rev.,  1898, 
73:  855-865;  Tomlinson  in  English  Rev.,  1911,  9:   114-121;   Longford  in 
Nineteenth  Cent.,   1912,  72:    1114-1130.] 


BIBLIOGRAPHY 

The  course  of  English  commerce  has  attracted  interest  in  increasing 
measure,  and  publications  upon  it  multiply,  as  we  approach  the  end  of  the 
century.  Only  a  few  books  can  be  noticed  here;  the  reader  is  referred  to 
the  topics  for  references  to  other  books  and  periodical  articles. 

Ward,  *  Reign  of  Queen  Victoria,  contains  good  chapters  on  the  in- 
dustrial development  of  the  reign.  Stephen  Bourne,  *  Trade,  popula- 
tion, and  food,  London,  1880,  is  a  careful  analysis  of  the  decade  1870-80, 
and  furnishes  a  good  starting-point  from  which  to  survey  the  course  of 
recent  trade.  J.  W.  Root,  Trade  relations  of  the  British  Empire,  Liver- 
pool, 1903,  provides  a  survey  of  English  commerce  at  the  close  of  the 
period,  with  special  reference  to  the  pending  question  of  tariff  changes. 
Similar  books  have  been  written  by  Edward  Pulsford  and  L.  G.  Chiozza 
Money.  A  useful  statistical  survey  is  provided  by  John  H.  Schooling, 
*The  British  trade  book,  fourth  issue,  London,  1911.  Lectures  on 
British  commerce,  with  preface  by  W.  P.  Reeves,  is  mainly  a  description 
of  the  present  organization.  A.  J.  Sargent,  *  Seaways  of  the  Empire, 
London,  1918,  is  a  good  survey  of  the  geography  of  British  trade;  and 
Adam  W.  Kirkaldy,  **  British  shipping,  London,  1914,  includes  both 
history  and  recent  organization.  **  British  industries,  edited  by  W.  J. 
Ashley,  is,  however,  the  book  deserving  of  the  warmest  recommendation; 
nowhere  else  will  the  reader  find  such  good  descriptions  of  the  leading 
industries  of  Great  Britain.  Each  industry  is  described  by  a  specialist 
of  recognized  authority,  and  though  the  book  does  not  go  far  into  history 
it  gives  indispensable  information  on  the  recent  results  of  historical 
development.  More  popular  and  less  valuable  is  Great  industries  of  Great 
Britain,  London,  Cassell,  no  date  (about  1880?),  3  vols. 


CHAPTER   XXXVIII 
ENGLAND:   PRE-WAR  PROBLEMS 

452.  Relative  decline  in  value  and  quality  of  English  exports. 

—  The  questions  agitating  the  minds  of  English  business  men 
and  statesmen  at  the  opening  of  the  twentieth  century  rose 
from  a  consideration  of  the  immediate  past  and  of  the  future 
of  English  commerce.  While  the  country  had  enjoyed  a  full 
measure  of  prosperity  in  recent  years,  and  had  witnessed  a 
considerable  increase  in  the  quantity  of  its  foreign  trade,  the 
quality  of  this  trade  awakened  forebodings.  The  increase  had 
been  almost  entirely  confined  to  imports.  Since  1872  the  ex- 
ports, though  they  had  increased  in  bulk,  had  remained  almost 
stationary  in  value;  they  had  kept  pace  neither  with  the  growth 
of  population  in  England,  nor  with  the  growth  in  value  of  the 
exports  of  other  countries.  In  the  twenty  years,  1881-1900, 
foreign  countries  enlarged  their  purchases  (imports)  by  11  per 
cent,  while  England  augmented  her  sales  to  them  (exports)  by 
only  4  per  cent;  the  British  possessions  enlarged  their  purchases 
by  17  per  cent,  while  English  sales  to  these  dependencies  showed 
an  actual  decrease  of  1  per  cent.  The  exports  of  which  England 
has  been  most  proud,  as  indicating  her  superior  industrial 
strength  —  the  textiles,  and  iron  and  steel  —  had  either  in- 
creased slowly  or  shown  an  actual  decline.  On  the  other  hand, 
the  exports  which  had  increased  in  value  were  of  a  kind  which 
the  English  viewed  with  disfavor.  Many  of  them  (apparel 
and  slops,  preserves,  soap,  furniture,  etc.)  were  the  product 
of  cheap  and  unskilled  workers  and  seemed  to  show  a  degrada- 
tion of  English  labor.  Others  of  them,  potter's  clay  and 
especially  coal,  were  raw  materials  which  the  English  would 
have  preferred  to  use  in  their  own  industry  at  home. 

386 


ENGLAND:  PRE-WAR  PROBLEMS 


387 


453.  Growth  in  exports  but  decline  in  relative  share  of  trade. 

— -  The  table  of  trade  of  the  United  Kingdom  in  the  preceding 
chapter  shows  that  the  period  of  stagnation  in  the  English 
export  trade  ended  about  1900,  and  that  there  was  a  marked 
recovery  between  that  date  and  1914,  even  after  allowance 
is  made,  as  it  should  be,  for  the  rise  in  the  general  level  of  prices, 
which  magnifies  the  actual  growth.  Studying  the  course  of 
trade  during  the  generation  comprised  between  the  dates 
1880-1909,  the  United  Kingdom  maintained  or  increased  the 
value  of  its  sales  in  all  but  two  of  the  more  important  markets 
of  the  world;  and  the  two  countries  to  which  British  exports 
have  declined,  Russia  and  Roumania,  would  not  by  themselves 
form  very  serious  exceptions.  If,  however,  we  select  for  study 
not  the  bare  figures  of  export  values,  but  the  figures  show- 
ing the  percentage  which  British  sales  to  any  country  form  of 
that  country's  total  imports,  the  result  is  very  different;  for  we 
are  then  measuring  British  progress  not  by  the  home  standard 
but  by  the  standard  set  by  commercial  competitors. 

454.  Illustration  by  the  recent  commerce  of  Japan.  —  The 
distinction  is  so  important  that  it  deserves  illustration  by  a  par- 
ticular example,  and  we  may  choose  for  the  purpose  a  country 
which  during  the  recent  period  has  furnished  a  rapidly  growing 
market  to  the  merchants  of  the  world,  namely,  Japan. 

ANNUAL  AVERAGE  IMPORTS  OF  JAPAN  IN  RECENT  DECADES 
(Values  in  millions  of  yen) 




From 

United 

From 

From 

other 

From  all 

Kingdom 

Germany 

U.S. 

countries 

countries 

1881-1890 

19.6 

3.4 

4.2 

19.3 

46.5 

1891-1900 

46.6 

14.8 

22.8 

87.0 

171.2 

1900-1909 

84.3 

36.1 

65.8 

199.8 

386.0 

The  Japanese  monetary  unit,  the  yen,  has  declined  consider- 
ably in  value  in  the  course  of  the  period,  and  therefore  no 
exact  equivalent  for  it  can  be  given;  but  even  allowing  foi  this 


388  A  HISTORY  OF  COMMERCE 

PERCENTAGE  OF  JAPAN'S  IMPORTS  FROM  EACH  COUNTRY 


From 
United 
Kingdom 

From 
Germany 

From 
U.S. 

From 
other 
countries 

From  all 
countries 

1881-1890 

42.2 

7.2 

8.9 

41.7 

100 

1891-1900 

27.3 

8.6 

13.3 

50.8 

100 

1900-1909 

21.8 

9.3 

17.0 

51.9 

100 

decline  the  growth  of  British  export  trade  to  Japan  appears 
satisfactory  if  the  student  regards  merely  the  figures  in  the 
first  column.  If  we  apply,  however,  the  comparative  standard, 
and  measure  the  British  exports  to  Japan  alongside  those  from, 
other  countries,  the  result  is  not  the  same. 

455.  Relative  decline  of  the  United  Kingdom  in  the  world's 
markets.  —  Pursuing  the  comparative  method,  illustrated  by 
the  last  preceding  table,  we  find  that  the  United  Kingdom 
during  the  generation  1880-1909  showed  an  increased  share  of 
sales  in  only  three  of  the  minor  markets  of  the  world:   Spain, 
Argentine  Republic,  Sweden.    It  almost  held  its  own  in  France, 
Switzerland  and  Norway;   but  in  most  of  the  important  mar- 
kets of  the  world  it  lost  ground  seriously. 

Even  in  its  trade  with  the  British  dependencies  the  United 
Kingdom  did  not  hold  its  own.  Comparing  the  percentage  of 
British  exports  to  a  dependency  with  its  total  imports,  we  find 
that  the  United  Kingdom  kept  its  place  in  only  one  of  its  colonial 
markets,  Mauritius,  a  purchaser  of  relative  insignificance,  while 
foreign  countries  gained  ground  from  it  in  British  India,  Aus- 
tralia, Canada  and  all  the  other  important  colonial  markets. 

456.  Significance  of  the  decline,  and  three  possible  expla- 
nations of  it.  —  The  relative  decline  in  English  exports  did 
not  imply  that  the  country  was  approaching  industrial  bank- 
ruptcy, but  it  did  mean,  if  long  continued,  the  loss  of  industrial 
leadership;    and  the  causes  of  this  decline  and  remedies  pro- 
posed to  meet  it  are  worthy  of  careful  attention.    The  decline 


ENGLAND:  PRE-WAR  PROBLEMS  389 

in  exports  may  be  attributed  to  one  of  three  factors :  (1)  weak- 
ness in  manufacturing  the  wares  which  form  the  staple  of  the 
export  trade;  (2)  weakness  in  marketing  these  wares,  when 
they  have  been  made;  (3)  the  adverse  influence  of  protective 
tariffs  in  other  countries. 

457.  (i)  Competition  in  manufactures  by  low-grade  labor. 
—  Considering  the  first  of  these  factors,  we  find  English  manu- 
factures menaced  by  competition  from  two  different  directions: 
from  the  East  (countries  like  India  and  Japan),  and  from  the 
West  (countries  like  Germany  and  the  United  States).    Eastern 
competition  threatened  especially  England's  staple  manufacture, 
cotton.    The  English  laborer  was  superior  in  every  point  to  his 
Asiatic  competitor,  but  not  enough  better  to  earn  his  higher 
wages  when  employed  in  the  manufacture  of  coarse  goods. 
England  had  built  up  a  serious  and  growing  competition  by 
exporting  machinery  and  sending  out  skilled  managers  and 
foremen  to  superintend  it.    During  the  past  generation  there 
had  been  an  immense  development  in  the  textile  manufactures 
of  India  and  Japan,  and  these  countries  were  able  now  not 
only  to  supply  a  large  proportion  of  their  own  demand,  but 
also  to  reach  out  into  neutral  markets  like  China. 

458.  Competition  in  manufactures  of  high-grade  labor. — 
More  serious,  because  capable  of  far  greater  extension,  was  the 
competition  which  the  Englishman  had  begun  to  experience 
from  advanced  western  peoples.     This  confined  itself  to  no  one 
branch  of  production,  but  spread  over  the  whole  broad  field 
of  manufactures.     Americans   and   Germans   had   begun  to 
supply  not  only  the  British  dependencies  .but  England  herself 
with  manufactured  wares,  in  increasing  measure.     Some  of 
the  reasons  suggested  to  explain  their  superiority  were  as  follows : 
(1)  Elementary  education  had  been  developed  only  recently  in 
England,  and  had  been  hampered  by  sectarian  questions;  the 
average  laborer  in  Germany  and  the  United  States  was  better 
equipped  for  modern  methods  of  manufacture  than  was  the 
Englishman.     (2)  It  was  asserted  that  trade  unions  had  se- 
riously detracted  from  the  productiveness  of  English  manufac- 


390  A  HISTORY  OF  COMMERCE 

tures,  by  preventing  the  introduction  of  improved  machinery 
and  by  limiting  output.  (3)  Technical  education  was  even  more 
backward  than  general  education;  improved  processes  were 
introduced  earlier  and  developed  further  in  other  countries, 
for  lack  of  a  class  of  trained  manufacturers  in  England.  (4) 
Finally,  and  probably  the  most  important  point  of  all,  English 
manufactures  appeared  to  suffer  from  the  very  fact  that  they 
had  been  long  established.  An  industry  was  divided  among 
many  independent  firms,  each  clinging  resolutely  to  the  plant, 
the  processes  and  the  methods  which  had  won  for  it  success 
in  the  past.  Foreign  countries  learned  all  that  the  English  had 
to  teach,  and  applied  the  lessons  in  a  new  field  in  which  they 
could  build  up  great  manufacturing  units,with  fresh  machinery- 
adapted  to  production  on  a  large  scale,  and  with  a  more  flexible 
and  more  efficient  organization.  It  was  charged  that  the  direct- 
ing class  in  England  had  lost  its  original  energy,  and  did  not 
realize  its  serious  responsibilities.  An  English  expert  who  in- 
vestigated the  American  cotton  industry  reported  that  there  was 
a  great  difference  in  the  energy,  intelligence,  and  adventurous- 
ness  of  the  managing  class  in  the  two  countries,  all  to  the  ad- 
vantage of  the  United  States. 

459.  (2)  Alleged  weakness  of  the  English  mercantile  organ- 
ization. —  In  the  preceding  paragraph  we  have  suggested 
various  elements  of  weakness  in  English  manufactures,  which 
in  greater  or  less  degree  were  bound  to  affect  the  power  lying 
behind  the  English  export  trade.  We  have  now  to  consider 
another  set  of  conditions,  which  are  easily  confused  with  the 
foregoing,  but  which  are  better  kept  separate.  English  manu- 
facturers might  be  strong,  and  still  they  would  have  but  a 
small  export  trade  if  they  were  not  informed  as  to  the  wants 
of  their  customers,  and  did  not  study  their  customers'  tastes 
in  supplying  goods.  This  set  of  conditions,  which  may  be 
termed  mercantile,  the  business  of  the  merchant  rather  than 
of  the  manufacturer,  we  may  study  under  two  heads:  (a) 
finding  out  what  is  wanted;  (6)  selling  a  suitable  ware  when 
it  has  been  made,. 


ENGLAND:  PRE-WAR  PROBLEMS  391 

460.  Insufficient  knowledge  of  the  needs  of  foreigners.  — 

(a)  The  complaint  was  general  that  the  scouts  of  British  com- 
merce, the  commercial  travelers,  were  too  few  in  number  and 
that  they  were  ill  prepared,  especially  in  their  knowledge  of 
foreign  languages.  The  English  exporter  shipped  goods  which 
he  thought  were  suitable,  without  knowledge  or  regard  of  the 
desires  of  his  customers.  A  business  man  who  had  had  seven 
years'  experience  with  trade  in  the  Empire  said,  "There  is  a 
universal  complaint:  'You  English  will  not  make  your  goods  to 
suit  our  markets.  You  send  your  samples  and  tell  us  to  take 
them  or  leave  them  —  you  don't  care  which.  If  we  ask  you 
to  alter  things  you  either  refuse  to  do  it  or  else  you  demand 
prohibitive  prices."  In  countries  where  English  is  not  spoken 
(Persia,  Sumatra,  South  America,  etc.)  the  conditions  were  still 
worse.  The  Merchandise  Marks  Act,  the  origin  of  the  familiar 
"Made  in  Germany,"  was  designed  to  protect  the  British 
colonist  from  having  foreign-made  goods  palmed  off  on  him  as 
English,  and  thus  help  the  English  manufacturer;  but  it 
served  only  to  advertise  foreign  manufactures,  and  led  the 
colonists  to  import  goods  directly  from  foreign  countries, 
instead  of  taking  them  through  English  hands. 

461.  Unwillingness  to  adopt  foreign  trade  customs.  —  (6) 
Finally,  when  wares  suited  to  sale  in  any  market  have  been 
manufactured,  they  need  to  be  sold,  to  maintain  trade.    Eng- 
lish exporters  were  criticised  for  allowing  their  wares  to  be 
driven  out  of  foreign  markets  by  other  wares,  no  better  in  them- 
selves but  for  some  reason  more  attractive  to  the  customer. 
Here  again  the  commercial  traveler  was  at  fault,  but  part  of 
the  blame  lay  on  the  exporter.    Sales  must  be  made  in  small 
lots  and  on  long  credit  in  some  countries,  if  they  are  to  be  made 
at  all;    and  the  English  had  shown  a  disinclination  to  adapt 
themselves  to  such  conditions  which  had  enabled  others  (es- 
pecially Germans)  to  take  trade  from  them.    When  other  things 
are  nearly  equal  slight  differences  in  packing  and  shipping  may 
turn  the  scale.     The  English  lost  trade  in  Australia  because 
they  sent  tacks  in  paper  packages  instead  of  in  cardboard 


392  A  HISTORY  OF  COMMERCE 

boxes,  because  they  sent  cartridges  in  lots  of  one  hundred 
instead  of  lots  of  twenty-five.  An  interesting  example  of  an 
opportunity  well  met  occurs  in  the  career  of  an  Englishman 
who  left  the  field  of  manufacture  to  become  a  leading  states- 
man—  Joseph  Chamberlain.  He  found  that  the  trade  with 
France  in  his  product,  wood-screws,  was  small;  he  introduced 
the  metric  system  of  measurement,  put  up  the  screws  in 
packages  of  the  size  usual  in  France  and  wrapped  in  blue  paper 
familiar  to  the  French  customer,  and  developed  a  large  export 
trade.  If  there  had  been  more  men  like  Chamberlain  in 
manufactures  in  England  there  would  have  been  less  need  of 
the  protective  policy  which  he  advocated  as  a  remedy  for  the 
troubles  of  English  business. 

462.  Tendency  to  remedy  these  faults.  —  There  is  no  doubt 
that  there  was  a  good  basis  for  these  charges  against  the 
British  manufacturer  and  merchant,  though  some  of  them 
doubtless  were  exaggerated,  and  it  is  impossible  to  apportion 
exactly  the  weight  that  should  be  allowed  to  any  one  of  them. 
The  crisis  of  the  World  War  was  needed  to  sweep  away  the 
customs  and  traditions  of  a  long  past.  The  stimulus  of  a 
struggle  for  national  existence,  with  the  insistent  demand  for 
the  highest  attainable  efficiency,  effected  reforms  reaching 
deeper  and  further  than  those  of  a  whole  previous  generation. 
Even  before  1914,  however,  many  men  in  responsible  positions 
in  English  politics  and  business  recognized  the  need  of  mending 
the  pace  if  England  was  to  keep  abreast  of  competitors  in  in- 
dustry and  commerce.  Interest  in  elementary  and  technical 
education  quickened;  inquiry  was  directed  to  the  means  by 
which  foreign  rivals  were  getting  ahead;  the  government, 
associations  and  individuals  worked  together  or  independently 
to  further  efficiency. 

A  parliamentary  committee  which  in  the  course  of  the  World 
War  made  a  careful  study  of  the  prospects  of  British  industry  and 
trade  reached  the  following  conclusions  as  regards  conditions  in 
the  previous  decade.  England  had  taken  but  a  small  part  in  the 
development  of  some  modern  industries,  particularly  the  chem- 


ENGLAND:  PRE-WAR  PROBLEMS  393 

ical  and  electrical;  the  country  had  made  comparatively  little 
progress  in  the  iron  and  steel  industry,  in  which  it  was  entirely 
overshadowed  by  Germany  and  the  United  States;  but  it  had 
shown  wholesome  vigor  and  capacity  for  growth  in  some  great 
manufactures,  such  as  the  textiles,  ship-building  and  some 
branches  of  machine-making.  British  trade  abroad  was  found 
to  suffer  from  the  competition  of  foreigners  who  were  found, 
in  some  cases  at  least,  to  be  following  methods  of  organization 
and  marketing  that  were  distinctly  more  efficient  than  those 
which  the  British  pursued. 

463.  (3)  Adverse  influence  of  foreign  tariffs;  proposals  to 
revise  the  English  policy  of  free  trade.  —  Under  conditions  of 
adversity  there  is  always  an  inclination  to  lay  the  blame,  rightly 
or  wrongly,  on  others.     A  considerable  party  in  England  as- 
serted that  the  reasons  for  the  recent  decline  were  political 
rather  than  economic,  resulting  from  the  protective  tariffs  of 
other  states;  and  this  party  asserted  that  a  change  in  the  tariff 
policy  of  England  and  of  the  colonies  was  needed  to  rescue 
British  commerce. 

There  can  be  no  question  of  the  main  fact,  that  protective 
tariffs  had  increased  considerably  during  the  last  quarter  of  the 
century.  It  is  estimated  that  the  principal  English  exports 
were  burdened  with  duties  equivalent  to  10  to  30  per  cent  ad 
valorem  in  most  states,  but  amounting  to  far  more  than  that 
in  some  cases  (72  per  cent  in  United  States,  130  per  cent  in 
Russia).  There  can  be  no  question  that  England  suffered  from 
these  restrictions;  every  commercial  state  suffers  from  them. 
It  is,  however,  open  to  grave  doubt  whether  England  could 
help  herself  by  a  change  in  policy;  and  the  question  of  what 
change,  if  any,  ought  to  be  made,  remained  unsettled. 

464.  Demand  for  customs  duties  as  a  means  of  defense 
and  retaliation.  —  One  group  of  " tariff  reformers"  clung  to 
the  ideal  of  free  trade,  and  favored  its  maintenance  as  the  policy 
of  the  country  in  general.    It  would,  however,  permit  devia- 
tions from  it  in  particular  cases.    The  adherents  of  this  view 
asserted  that  England  stripped  herself  of  the  armor  and  the 


394  A   HISTORY  OF  COMMERCE 

weapons  of  commercial  war  when  she  adopted  complete  free 
trade.  She  could  make  no  effective  protest  when  other  nations 
raised  tariffs  against  her,  marked  perhaps  by  offensive  discrimi- 
nations; she  must  suffer  everything  because  she  was  forbidden 
to  retaliate.  The  adherents  of  this  view  laid  particular  stress 
on  the  practice  of  "dumping,"  as  it  is  called.  The  manufac- 
turers of  protected  nations,  themselves,  secure  from  England's 
competition,  market  their  surplus  output  in  England  at  prices 
which  may  not  cover  the  costs,  much  less  the  profits,  of  produc- 
tion. It  is  cheaper  to  do  this  than  to  break  prices  in  the  pro- 
tected market  at  home;  it  kills  the  English  industries  and 
enables  foreign  manufacturers  in  the  long  run  to  raise  prices 
to  a  profitable  level  in  the  English  market.  For  retaliation 
against  protective  countries,  and  for  defense  against  "dump- 
ing," this  school  demanded  that  the  English  government  be 
armed  with  the  power  to  impose  heavy  duties,  to  be  temporary 
in  character  and  to  be  removed  as  soon  as  their  immediate 
object  has  been  accomplished.  Such  a  policy  has  been  adopted 
in  Canada. 

465.  Proposal  of  an  imperial  customs  union.  —  Another 
school  of  tariff  reformers,  led  by  Joseph  Chamberlain,  accepted 
in  general  the  views  just  indicated,  but  laid  particular  stress 
on  another  possibility  in  shaping  English  commercial  policy. 
It  would  make  the  whole  great  group  of  English  dependencies 
not  only  a  political  unit  but  a  commercial  unit  as  well,  bound 
together  in  an  imperial  customs  union  (Zollvereiri),  so  that 
trade  would  flow  from  place  to  place  within  the  Empire  instead 
of  crossing  its  frontier.  It  is  not  possible  here  to  discuss  the 
various  aspects  of  this  proposal,  of  which  some  of  the  most 
important  are  political  rather  than  commercial  in  character. 
The  attractiveness  of  the  plan  is  at  once  apparent;  it  promises 
to  assure  to  England  a  market  for  her  manufactures  in  the 
colonies,  and  to  the  colonies  a  protected  market  for  their  raw 
materials  in  England.  The  practical  weakness  of  the  plan  is, 
however,  equally  apparent;  no  law  would  be  necessary  to  secure 
this  result  if  the  various  parts  of  the  Empire  found  it  advan- 


ENGLAND:  PRE-WAR  PROBLEMS  395 

tageous  to  trade  with  each  other,  and  the  mere  suggestion  that 
a  law  is  necessary  shows  that  trade  would  be  cramped  and  the 
interests  of  individuals  hurt  by  such  an  arrangement. 

466.  Obstacles  to  a  customs  union.  —  The  course  of  trade 
has,  in  fact,  taken  lines  more  and  more  opposed  to  the  scheme 
of  a  customs  union.  During  the  first  part  of  the  century, 
when  England  was  still  protectionist,  and  when  the  mother 
country  made  the  laws  for  its  dependencies,  the  plan  could  be 
carried  out  with  comparatively  little  friction;  the  colonies  were 
engaged  chiefly  in  the  production  of  raw  materials,  and  were 
glad  to  exchange  these  for  English  manufactures.  Since  about 
1850,  however,  both  the  political  and  the  economic  organization 
of  the  Empire  have  changed.  The  self-governing  colonies  have 
received  the  right  to  make  their  own  laws,  and  have  used  it 
to  raise  protective  tariffs,  against  England  as  well  as  against 
other  countries.  Behind  the  barriers  of  the  tariff  they  have 
developed  a  considerable  manufacturing  industry.  They  were 
now  unwilling,  therefore,  to  open  wide  their  markets  to  English 
manufacturers;  and  showed  an  increasing  tendency  to  buy  what 
manufactures  they  did  import  from  other  countries  than  Eng- 
land. They  were  unable,  on  the  other  hand,  to  supply  in  full 
the  English  demand  for  raw  materials;  and  any  measure 
designed  to  restrict  supplies  of  raw  materials  to  some  source 
inside  the  British  Empire  threatened  mjury  to  producer  and 
consumer  at  home.  The  self-governing  colonies  gave  evidence 
of  the  strength  of  their  political  affection  by  enacting  differen- 
tial tariffs  favoring  the  British  producer.  Canada  began  the 
practice  in  1894,  and  later  enlarged  the  concession  until  it 
amounted  to  a  remission  of  one-third  of  the  regular  customs 
duty.  New  Zealand,  South  Africa  and  Australia  adopted  after 
1900  the  same  principle,  making  their  concessions  less  extensive. 
The  differential  advantage  thus  offered  the  English  exporter 
must  evidently  have  had  an  effect  on  the  course  of  trade.  The 
new  policy  was  keenly  resented  in  Germany,  where  it  was 
pictured  as  an  abuse  by  England  of  her  political  ascendancy  to 
deprive  other  countries  of  the  benefit  that  should  go  to  superior 


396 


A   HISTORY  OF  COMMERCE 


economic  efficiency.  On  the  other  hand  the  policy  seems  to  have 
been  less  important  than  ordinary  economic  factors  in  deter- 
mining the  flow  of  goods,  and  certainly  had  no  decisive  influence 
in  changing  the  customary  channels  of  trade. 

467.  Relative  progress  of  England  and  other  countries  just 
before  the  World  War.  —  Just  before  the  outbreak  of  the  World 
War  England  appeared  to  have  made  a  new  start  in  the  efforts 
to  keep  her  place  among  commercial  countries.  It  is  interest- 
ing to  compare  the  advance  that  she  had  made  with  the 
progress  of  Germany  and  of  the  United  States. 

ABSOLUTE  INCREASE  IN  TRADE  OP  THE  ANNUAL  AVERAGE  1910-13 
OVER  AVERAGE  1895-99. 

(Figures  in  millions  of  £  sterling,  with  rough  equivalent  in  $) 


United  Kingdom 

Germany 

United  States 

Net  imports  for  consump- 
tion   

£218 
72 

230 
177 

$1090 
360 

1150 

885 

£260 

48 

244 
170 

$1300 
240 

1220 
850 

£188 
81 

221 
140 

$940 
405 

1105 
700 

Imports  of  manufactures. 
Exports      of      domestic 
products  

Exports  of  manufactures. 

The  figures,  it  should  be  noted,  give  not  the  total  commerce 
of  any  country,  but  the  gain  which  each  country  had  made  in 
the  period  in  question.  The  figures  do  not  take  account  of  the 
difference  in  population  in  the  three  countries;  they  treat  the 
three  different  countries  as  units.  The  reader  in  studying  them 
cannot  fail  to  be  impressed  by  the  closeness  in  the  struggle 
for  commercial  leadership,  and  will  be  better  prepared  to  under- 
stand how  precarious  was  the  situation  if  in  one  of  the  countries 
the  view  was  dominant  that  commercial  interests  were  group 
interests,  to  be  furthered  by  any  assistance  which  the  state 
could  render,  if  necessary  by  the  sword. 


ENGLAND:  PRE-WAR  PROBLEMS  397 


QUESTIONS  AND  TOPICS 

1.  Note  the  different  senses  in  which  the  commerce  of  a  country 
may  be  described  as  "declining."     (1)  Other  things  remaining  the  same, 
there  may  be  an  absolute  decrease  in  the  quantity  and  value  of  both 
exports  and  imports.     (2)  The  decrease  may  affect  only  one  side  of  the 
balance,  while  the  total  figures  may  remain  the  same.    Why  is  the  de- 
crease viewed  with  especial  apprehension  if  it  affects  exports?    (3)  Other 
things  remaining  the  same,  including  the  quantity  of  wares,  there  may  be 
a  decrease  in  the  value  of  a  country's  commerce,  due  to  a  change  in  the 
level  of  prices.     (4)  The  quantity  and  value  of  a  country's  commerce 
may  remain  the  same,  and  yet  be  regarded  as  "declining"  if  the  popula- 
tion of  the  country  increases;  the  share  of  each  person  in  commerce  would 
be  diminishing.     (5)  Similarly,  a  country's  commerce  may  keep  pace 
with  its  population,  and  yet  be  termed  "declining"  if  the  commerce  of 
other  countries  increased  more  rapidly,  so  that  the  given  country  conducted 
a  diminishing  share  of  the  world's  trade.     (6)  Previous  standards  of 
"decline"  have  been  based  on  quantity,  measured  either  in  bulk  or  value, 
but  there  may  also  be  a  decline  in  quality.    A  scientist  might  gain  more 
income  if  he  adopted  the  trade  of  an  artisan,  but  he  would  be  thought, 
nevertheless,  to  lose  in  rank.     Endeavor  to  make  clear  to  yourself  the 
significance  of  each  one  of  these  various  changes,  and  be  prepared  to  dis- 
tinguish them  as  you  study  the  commercial  tendency  of  different  countries. 
Find  examples  of  as  many  of  them  as  you  can. 

2.  Pick  from  following  sections  a  concrete  example  to  illustrate  each 
each  of  the  three  heads  suggested  in  sect.  452. 

3.  English  industry  and  Eastern  competition.     [R.  S.  Gundry,  in 
Fortnightly  Review,  1895,  64:  609-620.] 

4.  Recent  history  of  elementary  education.     [Mathew  Arnold  in 
Ward,  Reign,  2:  238  ff.;  F.  E.  Smith  in  Fortnightly  Rev.,  1912,  vol.  97, 
p.  400  ff.] 

5.  How  trade  unionism  affects  British  industries.     [E.   A.   Pratt, 
Trade  unionism;  B.  Taylor  in  North  Amer.  Review,  1901,  173:  190-207; 
in  defense  of  trade  unions  of.  Edwards  in  Contemporary  Review,   1902, 
81:  113-128,  and  writings  of  Sidney  and  Beatrice  Webb.] 

6.  Technical  education  in  England.     [Rawson  in  Contemp.  Rev., 
1901,  80:  584-598.] 

7.  Reasons  for  decline  of  the  English  silk  trade.    [Parker  in  National 
Review,  1895,  26:  212-225.] 

8.  Relative  strength  of  modern  countries  in  manufactures.    [Schoen- 
hof  in  Forum,  1901,  31:  89-104  (statistical);  Browne  in  National  Review, 
1899.  33:  568-580  (espec.  U.  S.).] 


398  .  A  HISTORY  OF  COMMERCE 

9.  Faults  of  English  mercantile  organization.     [Lambert  in  Nine- 
teenth Century,  1898,  44:  940-956;   Greenwood  in  same,  1899,  45:  538- 
547. 

10.  Meaning  of  "dumping";  effects;  means  of  prevention.    [Ashley, 
Tariff  problem;    Marshall,  Industry  and  Trade.] 

11.  Balfour's  view  of  the  commercial  situation.     [A.   J.   Balfour, 
Economic  notes  on  insular  free  trade,  N.  Y.,  Longmans,   1903,  $.30; 
Tariff  reform,  $.10.] 

12.  Criticism  of  Balfour's  proposals.     [Quarterly  Review,  1903,  198: 
613-648.] 

13.  Chamberlain's  view  of  the  commercial  situation.    [Chamberlain, 
The  policy  of  imperial  preference,  National  Review,  1903-4,  42:  351-370.] 

14.  Discussion  of  Chamberlain's  proposals.    [Nelson  in  North  Amer. 
Review,   1903,   177:  183-191;    Goschen  in  Monthly  Review,  1903,   12: 
July,  38  ff.;   Quarterly  Review,  1903,  198:  246-278,   Edinburgh  Review, 
1904,  200:  449-476.] 

15.  The  project  of  an  imperial  customs  union.    [Mahan  in  National 
Review,  1902,  39:   390-408;    Colquhoun  in  North  Amer.  Review,  1903, 
177: 172-182;  Giffen,  in  Nineteenth  Century,  1902,  51:  693-705;  Bastable 
in  Econ.  Journal,  1902,  12:  507-513.] 

BIBLIOGRAPHY 

I  cannot  attempt  a  survey  of  the  vast  literature  which  has  sprung  in 
recent  years  from  the  discussion  of  the  proposal  to  change  the  commercial 
policy  of  England. 

A  bibliography  of  38  pages  compiled  under  the  supervision  of  A.  P.  C. 
Griffin,  Select  list  of  references  on  the  British  tariff  movement  (Chamber- 
lain's plan),  was  published  at  Washington,  1904.  For  a  defense  of  the 
protective  policy  the  reader  may  see  Ashley,  Tariff  problem;  for  rep- 
resentative statements  of  the  free  trade  views  see  William  Smart,  The 
return  to  protection,  London,  Macmillan,  1904;  and  L.  G.  C.  Money, 
Elements  of  the  fiscal  problem,  London,  King,  1903.  Considerable  his- 
torical importance  attaches  to  the  books  by  Gastrell  and  Williams,  which 
did  much  to  arouse  interest  in  the  great  commercial  question  of  the^day, 
Useful  surveys  are  provided  in  translations  of  two  foreign  works,  Carl  J. 
Fuchs,  The  trade  policy  of  Great  Britain,  London,  1905,  and  Victor  Berard, 
British  imperialism  and  commercial  supremacy,  London,  1906. 

Reading  of  a  more  substantial  character  is  offered  in  books  which 
analyze  the  organization  of  industry  and  discuss  the  merits  and  defects 
of  the  English.  For  a  survey  from  the  standpoint  of  theory  see  Alfred 
Marshall,  Industry  and  Trade,  London,  1919,  which  is  adapted  only  to 
advanced  students,  and  for  more  concrete  discussions,  suited  to  topical 


ENGLAND:  PRE-WAR  PROBLEMS  399 

reading,  Arthur  Shadwell,  **  Industrial  efficiency,  London,  1906,  two 
volumes,  reprinted  later  in  one;  Sydney  J.  Chapman,  **  Work  and  wages, 
3  vol.,  1904H4.  Interesting  comparisons  of  methods  and  results  in  Eng- 
land and  in  the  U.  S.  will  be  found  in  Report  of  the  Moseley  Industrial 
Commission,  London,  1903,  American  engineering  competition,  N.  Y., 
1901,  and  Causes  of  decay  of  a  British  industry,  (gun-making),  by  "Arti- 
fex"  and  "Opifex,"  London,  1907. 

The  analysis  of  commercial  statistics  in  Schooling  and  Fuchs  is  sup- 
plemented by  later  studies  to  be  found  in  the  Journal  of  the  Royal  Sta- 
tistical Society. 


CHAPTER  XXXIX 

THE   GERMAN   STATES 

468.  Connection  of  the  commercial  and  the  political  devel- 
opment of  Germany.  —  Standing  next  to  England  in  the  extent 
of  its  commerce  about  1900  is  a  country  which  at  the  beginning 
of  the  century,  if  not  among  the  last,  was  certainly  far  below 
the  leaders.    This  country  is  Germany.    We  shall  have  to  note, 
in  this  sketch  of  commercial  development  in  the  nineteenth 
century,  two  remarkable  examples  of  commercial  expansion. 
One  of  them,  furnished  by  the  United  States,  was  due  to  the 
spread  of  a  people,  originally  small,  over  a  great  area  rich  in 
resources.     The  other,   furnished   by  Germany,  was  due  to 
different  causes.     The  Germans  of  1800  occupied  a  territory 
not  greatly  different  from  that  which  composed  the  Germany 
of  1900,  and  to  which  nature  has  given  but  a  moderate  endow- 
ment of  resources.    There  was  no  Germany  at  the  earlier  date, 
however;   the  people  were  divided  up  among  a  great  number 
of  petty  states,  and  their  economic  forces  were  cramped  there- 
by so  as  to  hinder  their  development.    The  commercial  prog- 
ress of  the  century  has  depended  largely  on  the  reform  of  these 
political  conditions. 

469.  Summary  of  the  political  development.  —  It  will  be 
necessary,  therefore,  in  the  following  pages,  to  refer  frequently 
to  the  events  of  political  history,  and  for  the  convenience  of 
the  reader  a  brief  summary  is  here  given  of  the  course  of  that 
history.     The  Napoleonic  wars  wiped  out  the  smallest  and 
most  backward  of  the  German  states,  reducing  the  number 
from  over  three  hundred  to  about  forty.    Then,  until  near  the 
middle   of  the   century,   progress   depended   on  negotiations 
between  these  states  by  which  the  worst  effects  of  their  separa- 

400 


THE  GERMAN  STATES  401 

tion  were  removed.  In  1848  a  liberal  movement  reformed  the 
government  of  some  of  the  important  states  on  modern  lines, 
and  strengthened  the  demand  for  a  unified  Germany,  leaving 
still  undecided,  however,  the  question  whether  Prussia  or 
Austria  was  to  be  the  leading  state.  The  war  of  1866  between 
the  two  states  gave  the  leadership  to  Prussia;  and  the  war  of 
1870  with  France  led  finally  to  the  foundation  of  the  modern 
German  Empire,  under  which  at  last  the  people  found  room 
for  commercial  expansion  and  advanced  with  astonishing 
rapidity. 

470.  Conditions  of  Germany  about  1815.  —  In  spite  of  the 
service  which  Napoleon  did  Germany  by  abolishing  the  smallest 
states,  the  country  was  still  splintered  into  pieces  in  1815. 
A  network  of  tariff  frontiers  covered  the  land,   cutting  the 
great  rivers  and  the  natural  high-roads  of  commerce,   and 
preventing  the  movement  of  wares.    Not  only  did  each  state 
have  its  own  tariff;  some  had  internal  tariffs  in  addition.    The 
single  state  of  Prussia  had  altogether  some  sixty  tariffs.     Some 
of  the  states  were  made  of  scattered  pieces,  interspersed  among 
the  territories  of  their  neighbors;    even  a  small  state  might 
consist  of  eight  or  ten  fragments.     A  merchant,  to  reach  the 
center  of  the  country  from  the  national  frontier,  crossed  about 
sixteen  tariff  boundaries. 

Not  only  the  customs  tariffs  consumed  time  and  money. 
The  separatism  which  they  represented  spread  into  all  parts  of 
the  organization ;  there  were  seventeen  different  postal  systems 
in  the  country;  nearly  threescore  different  laws  on  bills  of 
exchange;  hundreds  of  different  coins. 

471.  Backwardness  of  commerce  and  manufactures.  —  The 
difficulties  of  internal  commerce  were  so  great  that  the  life 
of  the  people  was  arranged  in  large  part  to  enable  them  to 
exist  without  trade.     Most  of  the  people  were  engaged  in 
agriculture  and  supplied  themselves  with  nearly  all  the  neces- 
saries  of  life.     Manufactures   were   still   carried   on   almost 
exclusively  by  scattered  artisans.     The  German  governments 
still  clung  to  the  old  ideas  of  the  gild  system  and  public  regu- 


402  A  HISTORY  OF  COMMERCE 

lation.  Little  by  little  these  ideas  fell  into  the  background  in 
the  first  half  of  the  nineteenth  century,  but  it  is  important 
to  note  that  they  were  still  a  living  force  in  Germany  when 
England  had  discarded  them  and  was  in  the  full  rush  of  the 
developing  factory  system. 

472.  Factories  dependent  on  antiquated  sources  of  power.  — 
Hindered  in  development  by  the  persistence  of  old  institutions, 
and  by  the  lack  of  any  considerable  market  for  the  product, 
German  manufactures  remained  on  the  same  stage  on  which 
they  had  been  for  centuries  previously.    Even  the  textile  and 
mining  industries  were  conducted  according  to  the  time-honored 
methods  of  the  past;    little  progress  had  been  made  in  the 
application  of  machinery,  and  the  steam-engine  was  practically 
unknown.    In  Electoral  Saxony,  the  seat  now  of  a  great  cotton 
and  woolen  manufacture,  all  spinning  was  done  by  hand  up 
to  1786,  and  in  1812  the  small  factories  were  still  dependent 
on  this  source  of  power.     The  factories  of  medium  size  got 
their  power  from  oxen  and  horses;    only  the  large  factories 
were  run  by  water;   and  no  spinning  was  as  yet  done  entirely 
by  steam. 

473.  Commerce  small,  and  marked  by  the  export  of  raw 
materials.  —  No  statistics  exist  which  would  give  an  accurate 
picture  of  the  development  of  German  commerce  in  the  early 
part  of  the  nineteenth  century,  but  we  can  gain  some  idea 
of  its  backwardness  from  an  estimate  made  for  so  late  a  date 
as  1842.     At  this  time  German  foreign  trade  was  little  over 
one-tenth  of  what  it  was  in  1900,  and  it  must  have  been  con- 
siderably less  in  earlier  years,  before  the  reforms  which  will  be 
described  immediately.     The  fact  that  the  country  was  pre- 
dominantly agricultural  is  shown  in  the  fact  that  the  most 
important  items  in  export  were  raw  materials  and  foodstuffs, 
especially  grain.    The  industrial  population  had  not  advanced 
far  enough  to  work  up  even  the  raw  wool  produced  in  the 
country,  of  which  considerable  quantities  were  exported  to 
England.    Germany  did  export,  it  is  true,  a  number  of  manu- 
factured wares,  but  they  were  in  general  those  which  could  be 


THE  GERMAN  STATES 


403 


made  from  raw  materials  produced  at  home,  and  in  the  manu- 
facture of  which  cheap  hand  labor  was  still  the  important 
factor.  In  the  products,  however,  affected  by  the  improve- 
ments which  had  been  introduced  in  English  factories,  Germany 
confessed  her  weakness,  and  purchased  large  quantities  of 


DEVELOPMENT 

OF  THE 

GERMAN  ZOLLVEREIN 


yarn  and  iron  of  English  manufacturers  for  use  inside  the 
country. 

474.  Formation  of  the  Zollverein  (customs  union).  —  Such 
conditions  called  forth,  naturally,  remonstrances  from  the 
mercantile  classes.  Business  men  and  manufacturers  hi  all 
parts  of  Germany  began  soon  after  1815  to  agitate  for  a  reform. 
We  must  content  ourselves  with  noting  only  the  main  steps. 
Tariffs  inside  the  separate  states  were  reformed,  and  the  navi- 


404  A  HISTORY  OF  COMMERCE 

gation  of  the  gr,eat  rivers  was  made  easier.  Finally,  and  most 
important,  the  separate  states  began  to  draw  together  in 
groups,  forming  a  customs-union  (Zollvereiri),  with  a  common 
tariff  on  the  frontier  and  with  free  trade  inside.  The  move- 
ment, slow  at  first,  culminated  rapidly  in  1828,  when  three 
such  groups  were  formed,  one  in  the  North  (Prussia  and  others), 
one  in  the  South  (Bavaria  and  Wurtemberg),  and  a  third 
including  states  from  central  Germany  to  the  coast.  No  state 
liked  to  remain  isolated  when  consolidation  had  once  begun. 
Out  of  this  transition  stage  there  had  developed  by  1834  one 
great  union,  embracing  about  two-thirds  of  the  area  and 
population  out  of  which  the  German  Empire  was  later  to  be 
formed.  From  this  time  the  union  grew  more  slowly,  but  the 
people  within  it  could  now  afford  to  wait,  utilizing  its  new 
commercial  opportunities,  and  confident  that  the  other  Germans 
could  not  long  resist  its  attractions. 

475.  Development  following  the  formation  of  the  Zollverein. 
—  The  introduction  of  free  (,rade  inside  of  Germany  was 
opposed  then,  as  the  establishment  of  free  trade  in  the  world 
at  large  would  be  now,  by  producers  who  feared  the  competi- 
tion of  others  in  the  same  line  of  business.  Some  producers 
lost  by  the  change,  and  were  compelled  to  seek  other  lines  of 
work.  Many  manufacturers,  however,  who  opposed  the  change 
because  they  feared  it  would  hurt  them,  found  that  it  led 
actually  to  a  great  increase  in  prosperity;  it  extended  their 
market  and  gave  a  rich  reward  to  those  who  best  served  their 
customers.  German  manufactures  developed  and  began  to 
supply  a  demand  which  before  had  been  met  by  purchases 
abroad.  The  importation  of  foreign  manufactures  was  checked, 
while  there  was  an  increase  in  the  imports  of  raw  and  half 
manufactured  materials  (dyes,  coal,  iron)  and  of  colonial 
products  (sugar,  coffee),  indicating  a  growth  in  industrial 
power  and  in  welfare.  The  non-industrial  population  gained 
both  as  consumers,  by  the  better  supply  of  manufactured 
wares,  and  as  producers,  selling  products  to  the  developing 
industrial  class. 


THE  GERMAN  STATES  405 

476.  Protection  and  the  free-trade  movement.  —  The  tariff 
of  the  Zollverein  of  1834,  based  on  the  liberal  Prussian  tariff 
of  1818,  was  less  restrictive  and  less  complicated  than  that  of 
most  of  the  European  states  of  the  time.     Duties  which  had 
been  moderate,  however,  at  the  time  when  they  were  framed, 
became  protective  or  prohibitory  as  prices  fell;    and  some 
changes  toward  protection  were  made  consciously  to  stimulate 
manufactures  or  to  retaliate  against  other  countries.     About 
the  middle  of  the  century  the  current  set  in  the  other  direc- 
tion.    Germany  was  still  an  agricultural  country,  exporting 
grain,  and  the  agricultural  classes  secured  the  aid  of  merchants 
and  of  political  liberals  in  a  contest  for  lower  duties. 

477.  Political  factors  in  the  tariff  question.  —  The  free-trade 
movement  was  curiously  intermixed  with  matters  of  national 
politics,  especially  the  question  which  was  acute  from  1848 
to  1866,  whether  Prussia  or  Austria  was  to  lead  in  the  unifica- 
tion of  Germany.     Austria  had  not  entered  the  Zollverein, 
partly  because  the  Austrian  government  had  retained  the  pro- 
tective or  prohibitive  duties  of  the  previous  century,  and  was 
unwilling  to  reduce  them  by  entering  the  German  customs 
union.     It  was  the  policy  of  Prussia,  therefore,  to  keep  the 
duties  low  and  to  make  them  even  lower,  that  Austria  might 
be  excluded  from  influence  on  the  other  German  states.     Neg- 
lecting the  details,  which  are  extremely  complicated,  we  may 
note  only  the  result,  which  was  a  victory  for  Prussian  states- 
manship and  for  the  free-trade  party.     Treaties  with  France 
and  with  many  other  states  reduced  the  duties  far  in  the 
direction  of  free  trade. 

478.  Reaction  in  customs  policy  after  the  founding  of  the 
German   Empire.  —  At  the  time  of   the  foundation  of  the 
German  Empire,  therefore,  the  tarriff  was  low  and  the  free  trade 
movement  was  in  the  ascendant.    The  free  traders  gained  one 
more  victory,  in  1873,  by  securing  the  abolition  of  the  duties 
on  iron;   and  in  1877  about  95  per  cent  of  all  imports  entered 
duty  free.     This  victory  of  the  free  traders  was  their  last. 
The  founding  of  the  empire  stimulated  the  growth  of  national 


406  A  HISTORY  OF  COMMERCE 

feeling,  and  "Germany  for  the  Germans"  was  a  rallying  cry  of 
which  the  protectionist  made  good  use.  A  great  commercial 
crisis,  following  the  war  and  the  expenditure  of  the  huge 
indemnity  received  from  France,  caused  urgent  demands  for 
relief  from  the  manufacturers  who  had  greatly  extended  their 
works  and  found  now  that  they  could  not  market  the  product 
at  profitable  prices.  Of  the  iron  producers  it  was  said  that 
one-third  could  continue  under  the  existing  tariff,  that  one- 
third  could  continue  only  with  the  aid  of  protection,  and  that 
one-third  were  bound  to  be  ruined  whether  they  received  pro- 
tection or  not. 

479.  Return  to  protection  in  1879.  —  Even  the  agricultural 
classes  now  joined  the  protectionists;  they  found  their  foreign 
market  appropriated  and  their  home  market  threatened  by 
grain  imports  from  Russia,  America,  and  India;  they  were 
largely  in  debt  and  were  paying  the  heavier  taxes  of  the  empire. 
Finally,  political  factors  united  with  the  economic  to  induce  a 
change.  Bismarck  found  it  politic  to  reverse  his  position  and 
to  advocate  protection  instead  of  low  duties  or  free  trade; 
with  remarkable  adroitness  he  engineered  the  change  which 
was  realized  in  the  tariff  of  1879.  The  existing  duties  on 
manufactures  were  raised;  old  duties  which  had  been  abolished 
were  restored;  and  duties  protecting  agricultural  products  were 
introduced.  This  tariff,  with  changes  which  we  shall  notice 
later,  has  formed  the  basis  of  the  existing  tariff. 

QUESTIONS  AND  TOPICS 

1.  Review  in  one  of  the  smaller  manuals  of  European  history  the 
course  of  political  development  in  Germany  during  the  century. 

2.  Political  condition  of  the  German  states  at  the  beginning  of  the 
century.     [Seignobos,  first  parts  of  chaps.   12,  14;    Henderson,  vol.  2, 
chaps.  6,  7;    Bigelow,  vol.  3,  chap.  1.] 

3.  The  Zollverein.    [Rand,  EC.  hist.,  chap.  8;   Bigelow,  vol.  3,  chap. 
4;    Seignobos,   end  of  chap.    14.] 

4.  The  Prussian  tariff  of  1818.     [Bigelow,  vol.  3,  chap.  17.] 

5.  The  conflict  between  Prussia  and  Austria.     [Henderson,  vol.  2, 
chap.  9;    Seignobos,  chap.  15.] 

6.  The  return   to  protection.     ["Veritas,"   chap.   5.] 


THE  GERMAN  STATES  407 

BIBLIOGRAPHY 

The  best  single  reference  is  J.  H.  Clapham,  **  The  economic  develop- 
ment of  France  and  Germany,  1815-1914,  Cambridge,  1921.  Ogg, 
**  Econ.  development,  chap.  10,  industry,  and  chap.  14,  commerce,  is 
brief  on  the  earlier  part  of  the  century  but  gives  notably  full  bibliographies. 

A  bibliography  of  Germany,  including  references  to  a  number  of  articles 
in  English  will  be  found  in  Homans,  Cyclopedia  of  commerce,  N.  Y., 
1858,  p.  814.  The  student  who  is  confined  to  reading  in  English  must 
seek  in  Homans,  M'Culloch  and  similar  books,  or  in  the  general  ency- 
clopedias published  before  1870,  the  descriptions  there  given  of  German 
commerce  in  the  earlier  parts  of  the  century.  Most  of  the  English  read- 
ing which  is  readily  available  takes  up  economic  development  only  in 
connection  with  political  history.  Topical  references  have  been  given 
above  to  the  general  narrative  histories:  **Seignobos;  Ernest  F.  Hen- 
derson, A  short  history  of  Germany,  2  vols.,  N.  Y.,  Macmillan,  1902; 
Poultney  Bigelow,  History  of  the  German  struggle  for  liberty,  3  vols., 
N.  Y.,  Harper,  1896-1903.  An  anonymous  book,  by  "Veritas"  The 
German  Empire  of  to-day,  London,  Longmans,  1902,  includes  chapters 
on  the  history  of  German  commercial  policy  which  make  it  a  convenient 
source  of  information  to  readers  of  English.  The  best  book  in  English, 
however,  on  German  commercial  policy  is  W.  H.  Dawson,  **  Protection 
in  Germany,  London,  King,  1904,  which  covers  the  whole  century;  it 
is  a  book  to  be  studied,  not  merely  read.  A  valuable  summary  of  the 
history  of  German  American  commercial  relations  throughout  the  nine- 
teenth century  is  given  by  G.  M.  Fiske  in  Review  of  Reviews,  N.  Y.t 
March,  1902,  25:  323-328. 


CHAPTER   XL 
GERMANY  UNDER  THE  EMPIRE 

480.  Effect  on  economic  development  of  the  establishment 
of  the  Empire.  —  Leaving  now  the  topic  of  commercial  policy 
until  we  return  to  it  in  a  concluding  paragraph,  we  must 
attend  to  the  material  development  of  Germany.     Down  to 
the  foundation  of  the  Empire  in  1871,  progress,  if  steady,  still 
was  slow.     The  best  energies  of  the  people  were  absorbed  in 
the  great  political  conflicts  out  of  which  united  Germany  was 
to  emerge;    delicate  questions  of  the  relations  between  the 
German  states  had  to  be  settled,  and  much  needed  still  to  be 
accomplished  in  the  reform  of  industrial  legislation  inside  the 
states.     As  late  as  1862  it  was  estimated  that  five-eights  of 
the  people  were  still  engaged  in  agriculture  or  in  other  extract- 
ive industries.    In  comparison  with  this  period  of  preparation 
the  progress  which  Germany  has  made  since  1871  is  startling. 
The  direct  gains  which  Germany  made  in  the  war  with  France, 
the  acquisition  of  the  rich  provinces  of  Alsace  and  Lorraine, 
and  the  receipt  of  about  $1,000,000,000,  as  a  war  indemnity, 
were  large,  but  still  they  were  less  than  the  indirect  results: 
the  establishment  of  national  unity  on  a  lasting  basis,  freeing 
the  people  from  political  anxieties,  and  encouraging  them  to 
face  their  economic  problems  with  a  new  energy  and  pride  in 
their  strength,  and  with  a  new  hope  in  the  future.      This 
political  factor,  vague  and  intangible  as  it  may  be,  is  still  most 
important;    without  it  the  recent  economic  development  of 
Germany  could  be  regarded  only  as  a  miracle. 

481.  Development  of  commerce,  1870-1913.  —  In  the  period 
between  the  founding  of  the  Empire  and  the  outbreak  of  the 

408 


GERMANY   UNDER   THE  EMPIRE 


409 


World  War  the  population  of  Germany  increased  from  41  to  67 
million,  about  63%,  while  the  foreign  trade  increased  almost 
exactly  250  %,  four-fold  as  fast.  Comparing  the  figures  in  the 
accompanying  table  with  those  given  for  the  United  Kingdom 
in  a  preceding  chapter  we  see  that  in  1872  the  Germans  were 
much  behind  the  English,  separated  roughly  by  an  interval  of 
ten  years  of  development,  but  that  they  were  closing  the  gap 
as  time  passed,  and  at  the  end  of  the  period  had  passed  the 
English  in  the  value  of  their  export  trade. 

SPECIAL  COMMERCE  OP  GERMANY,  SELECTED  YEARS  IN  MILLIARDS 
OP  MARKS  AND  OP  DOLLARS. 


Imports 

Exports 

Marks 

Dollars 

Marks 

Dollars 

1872  

3.5 
3.6 
2.8 
3.0 
4.3 
4.2 
6.0 
7.4 
8.9 
10.8 

.9 

.9 
.7 
.7 
1.1 
1.1 
1.5 
1.9 
2.2 
2.7 

2.5 
2.6 
3.0 
2.9 
3.4 
3.4 
4.8 
5.8 
7.5 
10.1 

.6 
.6 
.7 
.7 
.8 
.9 
1.2 
1.5 
1.9 
2.5 

1875  

1880  

1885  

1890  :  

1895  

1900  

1905  

1910  

1913  

While  in  1871  60  men  out  of  100  were  engaged  in  agriculture, 
the  proportion  had  fallen  in  1907  to  27.  The  change  was 
brought  about  not  by  an  absolute  decline  of  the  number  in 
agriculture,  though  sometimes  that  was  observable,  but  by 
the  young  men  leaving  the  country  for  the  mines,  factories, 
and  commercial  centers.  Germany  had  in  1840  only  12  cities 
of  over  100,000  inhabitants,  while  at  the  end  of  the  century  it 
had  28,  of  which  the  chief,  Berlin,  was  growing  more  rapidly 
than  Chicago;  and  in  1910  it  had  48.  The  industrial  develop- 
ment during  the  generation  ending  in  1900  may  be  inferred  from 


410  A  HISTORY  OF  COMMERCE 

the  following:  coal  production  increased  over  250  per  cent, 
pig  iron  production  nearly  400  per  cent,  and  shipping  500 
per  cent. 

482.  Character  of  recent  German  commerce.  —  England  was 
characterized  in  a  preceding  paragraph  as  "offering  one  of  the 
most  remarkable  examples  of  advanced  commerce  in  the  world." 
In  an  earlier  period  England  stood  alone;   it  offered  the  most 
remarkable  example.    In  1913  Germany  stood  alongside  Eng- 
land, not  merely  as  regards  the  quantity  but  also  as  regards 
the  quality  of  her  trade.    'In  Germany  as  in  England  manu- 
factures formed  the  major  part  of  the  exports;  their  proportion 
of  the  total  value  approached  if  it  did  not  reach  the  English. 
Exports  of  raw  materials  and  crude  food  stuffs  had  declined 
to  less  than  one-quarter  of  the  total,  and  among  exports  of 
this  character  coal,  as  in  England,  took  the  dominant  place. 
On  the  other  hand  the  imports  of  raw  material  and  food  stuffs 
had  grown  until  they  amounted  to  about  three-quarters  of  the 
total  imports.     Of  the  total  value  of  imports  finished  manu- 
factures formed  only  13  per  cent,  a  proportion  actually  less  than 
that  of  the  English,  whose  policy  of  free  trade  permitted  wares 
to  be  brought  in  which  were  excluded  from  Germany  by  the 
customs  tariff.    If  we  arrange  the  wares  imported  in  1913  in 
the  order  of  their  value  we  do  not  find  a  single  finished  manu- 
facture among  the  first  26  items,  which  include  all  those  ex- 
ceeding 100  million  marks  in  value;   crude  copper  was  fifth  on 
the  list,  but  we  find  no  product  of  factory  industry  until  we  reach 
the  twenty-second  item,  woolen  yarn,  which  itself  was  destined 
to  feed  the  German  factories  and  in  large  part  to  be  exported 
in  a  finished  form.    To  understand  recent  German  commerce 
we  need  first  of  all,  evidently,  to  study  the  development  of 
Germany's  manufactures. 

483.  Rapid  development  of  factory  industry. —  Before  the 
founding  of  the  Empire  most  of  the  people  engaged  in  manu- 
factures in  Germany  still  worked  at  home,  with  simple  ma- 
chinery and  no  steam  power.     In  Saxony,  for  instance,  now 
one  of  the  industrial  centers  of  the  country,  the  manufactures 


GERMANY   UNDER   THE  EMPIRE  411 

of  cloth,  stockings,  lace,  etc.,  were  still  carried  on  outside  of 
factories  in  1868.  The  proportion  of  people  working  in  this 
simple  way  is  still  large  in  Germany,  but  the  number  has 
declined  in  many  lines  of  work  (weaving,  milling,  shoemaking, 
etc.),  and  the  great  growth  of  the  recent  period  has  been  in 
the  modern  factory  industry.  Since  1882  the  rate  of  growth 
of  the  factory  population  has  been  about  fourfold  that  of  the 
general  population.  The  results  of  this  development  have 
been  indicated  in  the  previous  paragraph,  and  they  furnish  a 
striking  contrast  to  conditions  as  they  were  at  the  time  of  the 
Centennial  Exposition  of  1876,  when  the  German  representative 
reported  that  in  the  industrial  field  Germany  had  received  a 
defeat  equal  to  two  Sedans,  that  German  industry  produced 
only  articles  of  poor  quality  and  of  slight  value  ("schlecht  und 
billig"),  and  that  Krupp  guns  were  the  only  product  of  which 
the  Germans  could  be  proud. 

484.  Resources  of  coal  and  iron.  —  Germany  was  favored 
by  some  important  physical  resources  in  building  up  its  modern 
industry.  The  country  had  a  rich  supply  of  coal,  the  great 
source  of  modern  power,  and  took  in  Europe  a  place  barely 
second  to  England  in  coal  production,  far  ahead  of  any  other 
country.  Germany  was  well  supplied  also  with  the  raw 
materials  for  the  staple  products,  iron  and  steel.  The  ore 
supplies  in  the  province  of  Lorraine,  taken  from  France  in 
1871,  are  the  most  extensive  in  Europe.  At  the  time  when  they 
were  acquired  they  were  thought  to  be  of  poor  quality,  because 
of  the  phosphorus  contained  in  them,  but  under  the  basic 
process  they  were  made  to  yield  metal  of  excellent  grade,  and 
in  addition  a  valuable  fertilizer,  obtained  from  the  phosphate 
slag.  Germany  has  developed  its  iron  resources  with  a  rapidity 
exceeded  only  in  the  United  States.  It  contributed  only  one- 
twenty-seventh  of  the  world's  iron  supply  in  1866,  but  had 
raised  its  share  to  one-sixth  at  the  end  of  the  century,  and  to 
about  one-fourth  before  1914.  It  passed  England  in  steel 
production  shortly  after  1890,  and  in  iron  production  about 
ten  years  later:  it  raised  constantly  the  figure  of  its  output 


412  A   HISTORY  OF  COMMERCE 

while  that  of  England  remained  relatively  stationary,  and  in 
the  decade  before  the  war  it  was  advancing  at  a  rate  seven- 
fold that  of  England. 

485.  Quality  of  the  people.  —  The  richest  resource  of  Ger- 
many, however,  was  its  people.    The  past  poverty  of  the  country 
and  the  trials  through  which  it  had  gone  nurtured  a  steadi- 
ness and  thriftiness  among  the  working  classes  which  made 
them  admirable  members  of  the  modern  productive  organi- 
zation.    An  effective  system  of  elementary  education  was 
established  in  parts  of  Germany  long  before  a  similar  step 
had  been  taken  in  most  other  countries;    and  practically  all 
the  people  had  not  only  the  rudiments  of  education,  but  also, 
what  is  perhaps  more  important,  a  respect  for  knowledge, 
a  desire  to  learn  and  to  make  the  best  use  of  their  learning, 
which  were  in  striking  contrast  with  the  careless  spirit  of  other 
peoples.     It  has  been  said  that  it  was  the  primary  school- 
teacher who  won  for  the  Germans  the  victories  of  1866  and 
1870;  and  the  Germans  could  hope  now  to  beat  their  industrial 
rivals  as  they  beat  their  military  opponents,  by  method  and 
steady  application  rather  than  by  brilliancy  and  dash. 

486.  Superiority   in   technical   training.  —  The   effects   of 
careful  training  were  as  evident  in  the  class  of  the  responsible 
managers  of  Germany's  industries  as  in  the  laboring  class. 
Nowhere  in  Europe  had  technical  education  reached  so  high  a 
development.     Not  only  were  the  appliances,  methods,  and 
system  of  organization  superior  to  those  of  other  states;   the 
technical  schools  reached  a  larger  part  of  the  population,  train- 
ing them  not  only  in  the  fundamental  subjects  of  science,  but 
also  in  the  special  branches  of  production  (mining,  weaving, 
dyeing,  etc.). 

The  results  were  everywhere  apparent  in  German  industry; 
to  instance  chemicals,  sugar,  glass,  and  electrical  appliances  is 
to  pick  only  a  few  examples  from  a  list  which  could  be  greatly 
extended.  Especially  noteworthy  was  the  readiness  of  the 
Germans  to  adopt  a  new  process  or  machine  which  was  first 
brought  out  in  some  other  country.  Englishmen  invented 


GERMANY   UNDER   THE  EMPIRE  413 

processes  to  make  a  fast  black  aniline  dye,  to  manufacture 
potassium  cyanide  for  the  reduction  of  gold,  to  make  steel  by 
the  basic  process;  all  these  inventions  were  developed  first 
into  commercial  successes  in  Germany.  The  Germans  imported, 
if  necessary,  foreign  machinery  and  foreign  foremen  to  super- 
intend its  action,  until  they  had  mastered  the  principles  of 
operation  and  had  firmly  established  the  industry  in  its  new 
home. 

487.  Efficiency  of  the  mercantile  organization.  —  Similar 
considerations   account  for   the   success   of  the  Germans  in 
commerce,  and  explain  the  rapid  development  of  their  export 
trade.    They  took  pains  to  find  out  what  wares  their  customers 
wanted,  and  to  sell  them  when  they  had  been  made.     The 
report  of  a  consul  of  the  United  States  in  Chile  suggests  the 
methods  which  led  to  their  success.     "Thirty  years  ago," 
he  wrote  in  1902,  "the  trade  coming  to  the  Pacific  ports  was 
monopolized  by  the  British  and  a  few  American  houses.    The 
Germans  were  represented  only  by  jobbers  and  shopkeepers  in 
the  coast  towns.    The  Germans,  appreciating  the  importance 
of  this  trade,  made  well-conceived  plans  to  gain  it.     They 
carefully  trained  a  number  of  able  young  men.    When  these  were 
versed  in  commercial  affairs  and  in  the  language  of  the  people 
among  whom  they  were  to  live,  considerable  shipments  of  goods 
were  made  to  the  British  and  American  houses,  and  the  young 
men  found  places  as  clerks  and  were  given  special  charge  of 
these  consignments.    They  remained  there  till  they  acquired  a 
complete  knowledge  of  the  coast  trade;  then  they  were  provided 
with  ample  funds  and  stocks  and  opened  German  houses,  with 
brilliant  success.    In  many  branches  they  now  have  a  monop- 
oly, and  the  British  and  American  houses  no  longer  attempt 
competition." 

488.  Commercial  travelers  and  trade  papers.  —  No  country 
in  the  world  had  commercial  travelers  so  well  trained,  especially 
in  the  command  of  languages,  as  Germany.    The  Germans  were 
said  to  be  the  only  foreign  people  who  had  a  thorough  knowl- 
edge of  Russia  in  a  business  way;  they  were  able  to  meet  the 


414  A  HISTORY  OF  COMMERCE 

demand  for  long  credits  in  that  and  other  eastern  countries; 
and  so  build  up  their  trade  and  still  avoid  serious  losses.  The 
exporters  were  not  content  with  sending  abroad  their  ordinary 
trade  catalogues,  as  were  the  English,  Americans,  and  others; 
they  sent  personal  representatives  speaking  the  language  of 
the  country,  or  at  least  reached  a  prospective  customer  by  some 
communication  in  his  own  language.  Trade  papers  for  foreign 
circulation  were  printed  in  Germany  in  the  following  languages : 
English,  French,  Russian,  Spanish,  Portuguese,  Turkish, 
Japanese,  and  Chinese. 

489.  Other    factors    in    commercial    development.  —  The 
rapidity  of  their  industrial  and  commercial  development  forced 
a  departure  from  the  methods  of  the  past,  and  stimulated  new 
forms  of  co-operation  in  business.     The  same  period  which 
was  marked  in  the  United  States  by  the  rise  of  the  great 
aggregations  of  capital  known  generally  as  "trusts"  produced 
in  Germany  the  "cartel,"  of  a  somewhat  similar  nature,  which 
had  its  shady  sides  but  which  made  some  very  important  con- 
tributions to  efficiency  in  the  making  and  marketing  of  goods. 
German  banks  followed  a  course  which  in  contrast  to  the  con- 
servative methods  of  the  old  established  banks  of  England  and 
the  United  States  appeared  speculative,  but  which  in  this 
period  when  so  many  conditions  were  favorable  proved  im- 
mensely profitable^  and  effective.     The  great  German  banks 
promoted  and  financed  to  a  successful  conclusion  many  new 
enterprises  in  industry  and  trade.    The  government  played  an 
active  part,  not  merely  by  such  services  as  were  expected  of 
the  State  in  other  countries,  but  also  by  more  positive  contri- 
butions.   Its  control  of  internal  transportation,  by  the  system 
of  state-owned  railways  and  canals,  gave  it  great  power  in 
directing  and  assisting  economic  development;    and  it  sup- 
ported most  generously  the  development  of  shipbuilding,  and 
the  extension  of  German  lines  of  shipping,  for  the  benefit  of 
the  exporter. 

490.  Deductions  to  be  made  in  estimating  German  progress. 
-~We  must  note  some  factors  which  help  to  account  for  the 


GERMANY   UNDER   THE  EMPIRE  415 

great  development  of  German  commerce,  but  which  should  be 
offset  by  other  considerations,  and  which  therefore  do  not 
represent  net  contributions  to  the  world's  welfare.  The  Ger- 
mans themselves  were  being  taxed  for  the  particular  benefit  of 
the  export  trade.  The  government  so  far  as  possible  freed  the 
export  industries  from  the  burden  of  the  tariff,  which  weighed 
heavily  on  some  classes  in  the  country,  and  beyond  that,  gave 
actual  bounties  to  stimulate  exports.  These  were  commonly 
concealed,  for  instance  in  the  form  of  special  rates  in  trans- 
portation, but  had  nevertheless  to  be  paid  out  of  the  pockets 
of  the  German  taxpayer  and  business  man.  Furthermore, 
private  organizations  followed  substantially  the  same  practice. 
The  great  "cartels,"  kept  prices  high  at  home  to  gain  resources 
with  which  they  might  finance  their  fight  against  competitors 
in  foreign  markets.  They  won  much  trade,  but  they  won  it 
at  costs,  borne  sometimes  by  Germans  and  sometimes  by  out- 
siders, which  need  to  be  taken  into  account  if  a  fair  balance  is 
to  be  struck.  Finally,  there  must  be  put  on  the  debit  side  of  the 
account  some  gains  which  the  Germans  made  in  commerce,  not 
by  greater  efficiency  but  by  less  honesty:  by  the  imitation  of 
trade  marks,  by  the  bribery  of  agents,  etc.  In  this  regard  they 
were  not  the  only  offenders.  They  did  not  win  the  bulk  of 
their  trade  in  this  way.  Their  departures  from  accepted 
standards  of  commercial  morality  were,  at  least,  sufficient 
to  establish  for  German  trade  methods  an  unenviable  reputation. 
491.  Examples  of  German  success  in  trade.  —  If  we  add  all 
these  influences  helping  Germans  to  market  their  goods,  to 
those  which  enable  them  to  manufacture  to  advantage,  we  can 
understand  the  development  of  the  German  export  trade,  and 
can  see  why  German  wares,  even  when  they  were  no  better  than 
the  wares  of  other  countries,  won  foreign  markets.  A  French 
brewery  got  the  first  prize  at  Baden  Baden,  but  German  beer 
was  sold  all  along  the  Parisian  boulevards.  German  brewers 
sent  an  increasing  amount  of  their  beer  to  the  British  colonies 
and  India,  because  they  had  learned  not  only  all  that  English 
brewers  car  teach  them,  but  they  had  learned,  too,  the  tastes 


416  A  HISTORY  OF  COMMERCE 

of  their  customers  in  distant  countries,  and  had  adapted  their 
product  to  suit  these  tastes,  while  English  brewers  clung  fast 
to  the  old  methods.  They  had  greatly  extended  their  trade 
in  textiles,  carpets,  etc.,  "not  so  much  because  they  are  cheaper, 
as  because  they  are  quicker  and  more  dexterous  in  fitting 
their  supply  to  the  changing  demands  of  the  market."  They 
had  taken  away  a  large  part  of  the  French  export  trade  in 
dolls,  by  taking  pains  to  fit  the  doll  for  the  country  to  which 
it  is  going,  getting  English  cloths  in  which  to  dress  a  doll  for 
England,  reproducing  exactly  national  types  of  furniture,  etc. 
German  wares,  wrote  the  British  consul  at  Paramaribo,  dis- 
placed Sheffield  wares  in  his  district,  not  because  they  were 
more  serviceable,  but  because  they  were  cheaper,  were  polished 
and  painted,  and  arranged  for  display  in  shop  windows,  while 
the  English  wares  were  laid  away  in  brown  paper  on  a  shelf. 
Measuring  German  commerce  as  we  have  measured  that  of 
England,  by  noting  the  percentage  which  German  sales  to  any 
country  formed  of  the  country's  total  imports,  we  find  that  in 
the  period  from  1881  to  1909  Germany's  share  of  sales  fell 
off  in  only  one  foreign  market  of  importance,  the  Netherlands, 
and,  on  the  other  hand,  its  share  grew,  and  in  some  cases  grew 
greatly,  in  nine  of  the  ten  great  markets  of  the  world. 

492.  The  German  tariff  and  the  agrarian  party.  —  It  is 
impossible  to  say  just  how  far  the  progress  of  Germany  in 
this  period  was  furthered  by  the  government's  commercial 
policy,  for,  as  will  appear,  this  policy  retarded  development  in 
some  lines  to  favor  it  in  others.  This,  at  least,  may  be  said 
with  assurance,  that  the  policy  was  strikingly  characteristic 
of  the  attitude  of  the  German  state,  and  throws  much  light 
on  the  conditions  preceding  the  outbreak  of  the  World  War. 
The  recent  history  of  commercial  policy  in  Germany  may  be 
discussed  under  two  aspects:  its  relation  to  domestic  politics 
and  its  relation  to  foreign  politics. 

The  protective  tariff  of  1879  was  designed  particularly  to 
favor  the  growing  manufactures  of  the  country.  Agriculture 
had  been  in  the  past  an  export  industry,  and  the  agrarian  rep- 


GERMANY   UNDER   THE  EMPIRE  417 

resentatives  had  favored  free  trade.  Already,  however,  there 
were  signs  of  that  far-reaching  change  by  which  cheap  food 
stuffs  from  distant  parts  of  the  world  were  enabled  to  under- 
sell the  domestic  product;  and  a  moderate  protective  duty  on 
the  cereals  was  granted  in  the  tariff  of  1879.  The  German 
producers  of  bread  stuffs  and  meat  found,  however,  that  they 
had  underestimated  the  danger  to  which  they  were  exposed, 
and  that  they  could  keep  their  home  market  only  by  sacri- 
fices which  appeared  to  them  desperate.  They  obtained  addi- 
tions to  the  duties;  they  managed,  under  the  guise  of  sanitary 
precautions,  to  subject  the  importation  of  certain  foods  to 
expense  and  delay,  even  when  it  was  not  altogether  prohibited; 
and  in  the  general  revision  of  the  tariff,  in  1902,  they  obtained 
not  only  a  general  increase  in  the  agrarian  duties  but  also  a 
specific  provision  which  prevented  the  government  from  re- 
ducing these  duties  below  a  certain  point,  in  treaties  which  it 
might  make  with  other  powers.  These  favors  to  the  agrarian 
interest  were  accompanied  by  the  revision  of  rates  in  the 
interest  of  manufacturers,  but  the  government  was  evidently 
taking  with  one  hand  from  the  producer  what  it  appeared  to 
offer  him  with  the  other  hand.  There  is  unmistakable  evidence 
that  the  higher  duties  on  food  stuffs  restricted  consumption 
and  checked  the  rise  in  the  standard  of  living.  The  policy 
threatened  to  impair  the  ability  of  the  industrial  and  mercan- 
tile classes  to  compete  with  foreign  rivals  who  were  not  thus 
burdened  in  getting  the  necessaries  of  life.  On  the  other  hand, 
it  offered  but  slight  advantage  to  the  major  part  of  the  German 
agriculturists,  who  carried  on  mixed  farming  on  a  small  scale; 
its  benefits  were  mostly  restricted  to  the  owners  of  large 
estates,  east  of  the  Elbe  river,  who  specialized  in  the  produc- 
tion of  grain  and  meat  with  hired  labor.  What,  then,  is  the 
explanation  of  the  policy?  It  was,  to  use"  the  German  phrase, 
a  Machtfrage,  a  question  of  power.  The  characteristic  agrarian 
was  a  Junker,  a  Prussian  squire,  devoted  to  the  military  am- 
bitions of  the  Hohenzollerns,  endowed  by  custom  and  indeed 
by  law  with  superior  political  influence.  In  spite  of  its  indus- 


418  A  HISTORY  OF  COMMERCE 

trial  development,  and  in  spite  of  some  democratic  features 
of  its  constitution,  Germany  was  still  at  heart  a  military  mon- 
archy. The  course  of  policy  was  determined  by  reference  not 
to  the  general  economic  welfare,  but  to  the  interests  of  those 
special  groups  which  shared  the  political  and  military  tradi- 
tions of  the  Prussian  monarchy. 

493.  International  aspects  of  German  tariff  policy.  —  Like- 
wise in  foreign  relations  German  tariff  policy  was  colored  by 
the  traditional  Prussian  view  that  commercial  competition 
was  not  merely  the  struggle  of  individual  producers  and  mer- 
chants, but  was  a  group  conflict,  in  which  the  state  should 
take  an  active  part,  making  the  most  of  the  particular  weak- 
nesses of  states  opposed  to  it.  In  1871  Germany  had  forced 
France  to  subscribe  to  the  principle  that  each  country  would 
grant  the  other  all  commercial  favors  accorded  another  power. 
Being  a  part  of  the  treaty  of  peace  this  provision  was  inter- 
minable; it  could  be  amended  only  by  formal  treaty.  Germany 
at  the  time  appeared  to  get  more  than  she  gave.  As  she  real- 
ized her  industrial  and  commercial  strength,  however,  she 
became  dissatisfied  with  a  position  of  mere  equality.  About 
1890,  under  Chancellor  von  Caprivi,  Germany  began  the  policy 
of  making  special  bargains  with  individual  states  by  treaties 
fixing  the  tariff  rates.  In  the  negotiations  with  Russia  each 
party  stood  out  obstinately  for  certain  favors,  and  since 
agreement  appeared  impossible  each  party  sought  to  punish 
the  other  by  imposing  punitive  rates,  amounting  to  prohibi- 
tions. This  war  of  tariffs  lasted  less  than  a  year,  for  it  affected 
so  disastrously  the  commerce  between  the  two  countries,  that 
each  was  glad  to  reach  an  agreement  by  mutual  concession. 
The  same  spirit,  however,  which  marked  this  contest,  appeared 
in  the  commercial  relations  of  Germany  with  other  states; 
she  conducted  similar  tariff  wars  against  Spain  and  against 
Canada,  and  seems  to  have  meditated  like  action  against  the 
United  States  but  prudently  refrained  from  a  breach  with 
a  country  which  was  approaching  industrial  independence 
and  which  was  the  source  of  indispensable  raw  materials. 


GERMANY   UNDER   THE  EMPIRE  419 

494.  The  tariff  of  1902;  Central  Europe.  —  Before  the 
treaties  framed  under  Count  Caprivi  were  due  to  expire  Ger- 
many prepared  for  another  commercial  campaign.  A  new 
tariff  was  passed  in  1902,  but  was  held  in  suspense  until  treaties 
could  be  negotiated  under  it,  and  was  not  put  into  effect  until 
1906.  The  new  tariff  was  ingeniously  devised  to  enable  Ger- 
many to  offer  special  favors  to  individual  countries,  in  spite 
of  nominal  adherence  to  the  principle  of  granting  to  every 
country  with  which  a  treaty  was  made  the  concessions  granted 
to  the  most  favored  nation;  and  gave  to  the  government,  on 
the  other  hand,  if  occasion  demanded,  the  power  to  wage  com- 
mercial war  by  the  imposition  of  triple  duties.  Germany 
is  commonly  supposed  to  have  driven  some  hard  bargains  in 
the  treaties  that  were  framed  under  this  act,  but  did  not  have 
recourse,  as  in  the  preceding  period,  to  tariff  wars  as  a  means 
of  opening  foreign  markets.  Still,  the  practice  of  bargaining 
for  commercial  advantage  by  treaty,  which  Germany  had  so 
vigorously  developed,  introduced  a  tension  in  international 
economic  relations  that  caused  the  states  of  Europe  to  look 
forward  with  apprehension  to  the  years  1917-1918  when  the 
important  German  treaties  expired.  The  project  of  a  customs 
union  of  Central  Europe,  which  had  long  been  discussed  in 
an  academic  way,  and  which  appeared  to  many  Germans  in 
the  early  years  of  the  World  War  as  a  practicable  plan,  shortly 
to  be  realized,  did  not  propose  to  introduce  free  trade  immedi- 
ately among  its  member  states,  but  it  did  promise  to  assure 
Germany  such  dominance  over  the  others  that  she  could  use 
not  only  their  economic  but  their  military  resources  as  well, 
to  further  her  plans  for  commercial  expansion.  The  plan  was 
characteristic  of  German  ambitions,  a  summary  of  the  tend- 
encies that  had  long  been  manifesting  themselves  in  German 
policy,  and  a  significant  index  of  results  that  would  have 
followed  if  Germany  had  won  the  war. 


420  A  HISTORY  OF  COMMERCE 

QUESTIONS  AND  TOPICS 

1.  What  other  examples  can  you  find  of  countries  apparently  in- 
vigorated by  a  war  for  independence  or  national  unity? 

2.  Recent  political  development  of  Germany.    [Seignobos,  chap.  16; 
Dawson,  chap.  11;    Schierbrand,  chap.  6.] 

3.  Development  of  commerce  under  the  Empire.     [Whitman,  chap. 
12;    Dawson,  Evolution,   chap.   4.] 

4.  Prepare,  in  the  manner  suggested  in  the  chapter  on  England, 
graphic  representations  of  the  chief  imports  and  exports.     [Statistics  in 
Statesman's  Year-Book.] 

5.  Recent  commerce  of  Germany.     [Schierbrand,  chap.  13;   Arndt, 
Germany  in  international  commerce,  International  Monthly,   1902,  5: 
526-546;   Bernstein,  Growth  of  German  exports,  Contemporary  Review, 
1903,   84:    775-787;     Williams,   Made  in  Germany  —  five  years  after, 
National  Review,  1901-2,  38:    130-144;    Gastrell,  chap.  8  (statistical).] 

6.  Development  of  factory  industry  and  condition  of  factory  labor. 
[Dawson,  chap.  3.] 

7.  The  Krupp  iron  works.     [Schierbrand,  chap.  14.] 

8.  Methods  and  results  of  education.     [Dawson,   chap.   6  Schier- 
brand, chap.  18.] 

9.  Various  reasons  alleged  to  explain  German  superiority  in  manu- 
factures and  commerce.     [Williams,  Made  in  Germany,  chap.  7.] 

10.  The  German  chemical  industry,  [O.  Eltzbacher,  in  Contemporary 
Review,  1904,  85:   627-639;    or  Barker,  Mod.  Germany,  chap.  25. 

11.  Effect  of  education  on  the  mercantile  organization.     [Findlay, 
Genesis  of  the  German  clerk,  Fortnightly  Review,  1899,  72:    533-536; 
Bashford  in  Fortnightly  Rev.,  1905,  84:   692-707.] 

12.  The  German  colonial  movement.    ["Veritas,"  chap.    7;   Schier- 
brand, chap.  20;  Birchenough  in  Nineteenth  Century,  1898,  43:  182-191; 
Keller,  Colonization,  chap.  14;   Dawson,  Evolution,  ch.  18,  19.] 

13.  Development  of  German  shipping.     [Bashford  in  Fortnightly 
Review,  1903,  79:    287-302;    Schierbrand,  chap.  15:    Barker,  chap.  24.] 

14.  German  transportation  system  and  policy.     ["Veritas,"  chap. 
6:    Dawson,  Evolution  chap.  11:    Barker,  chap.  22,  23.] 

15.  German  tariff  policy  to  about  1890.     [Villard  in  Yale  Review, 
1892-3,   1:    10-20.] 

16.  Commercial  treaties  about  1890.    [Farnam  in  same,  1:   20-34.] 

17.  The  agrarian  movement.     [Schierbrand,   chap.  9.] 

18.  Tariff  policy  about  1900.     [Schierbrand,  chap.   12;    Schoenhof 
in  Forum,   1901-2,  32;    105-115;    Eltzbacher  in  Nineteenth  Century, 
1903,  54:   181-196;   H.  Dietzel  in  Quarterly  Jour,  of  Econ.,  1902-3,  17: 
365-416;   W.  H.  Dawson  in  Econ.  Jour.,  1902,  12:    15-23.] 


GERMANY   UNDER   THE  EMPIRE  421 

19.  Effects  of  German  tariff  policy.     [Lotz  in  Econ.  Journal,  1904, 
14:    515-526;    Mann  in  Contemp.  Rev.,  1905.  87:    347-358.] 

20.  German  methods  in  the  commercial  penetration  of  a  particular 
country.     [See  articles  in  the  Quarterly  Rev.,  as  follows:    U.  S.,  July, 
1919,  232:    16-37;   France,  1916,  225:   383-399;   Italy,  1915,  224:    136- 
149;    Turkey,   Oct.   1917,  228:    296-314.] 

21.  German  banks  and  "peaceful  penetration."    ([McLaren  in  Quart. 
Rev.,  Jan.  1919,  231:    76-96.] 

BIBLIOGRAPHY 

Readers  of  English  will  find  the  recent  commercial  history  of  Germany 
treated  more  fully  than  that  of  any  other  country  of  the  Continent.  Be- 
sides the  books  by  Clapham  and  "Veritas,"  named  in  the  preceding  chap- 
ter, may  be  mentioned:  S.  Whitman,  Imperial  Germany,  1901;  W.  H. 
Dawson,  German  life,  N.  Y.,  1901,  and  **  Evolution  of  modern  Germany, 
revised  edition,  1918;  W.  von  Schierbrand,  *  Germany,  N.  Y.,  1902 
(better  than  the  later  editions) ;  J.  Ellis  Barker,  Modern  Germany,  various 
editions  of  which  the  fourth,  N.  Y.,  1912,  is  to  be  preferred.  Dawson, 
Protection,  and  Ogg  will  continue  to  be  of  service  in  this  period;  and  ref- 
erence may  also  be  made  to  report  of  the  U.  S.  Tariff  Commission,  1919, 
on  Reciprocity  and  Commercial  Treaties,  467-487. 

G.  A.  Pogson,  Germany  and  its  trade,  London,  1903,  is  a  compilation 
of  statistics  for  the  period  preceding  1900,  and  a  convenient  statistical 
survey  for  the  period  since  that  date  is  given  by  Helfferich,  Germany's 
economic  progress,  Berlin,  1913. 

Arraignments  of  German  business  methods  will  be  found  in  A.  D.  Mc- 
Laren, Peaceful  penetration,  London,  1916;  H.  Hauser,  Germany's  com- 
mercial grip  on  the  world,  London,  1917;  Millioud,  The  ruling  caste  and 
frenzied  trade  in  Germany,  London,  1916;  Claes,  The  German  mole, 
London,  1915,  (for  Belgium). 


CHAPTER  XLI 

FRANCE 

495.  Condition  of  France  before  the  Revolution.  —  France 
was  considered,  as  the  reader  will  recall,  the  richest  and  most 
powerful  state  of  Europe  till  near  the  end  of  the  eighteenth 
century.    The  population  of  the  country  was  more  than  double 
that  of  Great  Britain,  the  resources  were  envied  by  all  other 
nations,  the  commerce  was  exceeded  only  by  English  commerce 
and  surpassed  that  in  some  respects.    The  French  sugar  colo- 
nies were  considered  the  most  valuable  colonial  possession  in 
the  world,  and  France  surpassed  England  in  trade  with  her 
direct  neighbors  (some  of  the  German  states,  Italy,  Spain). 
Under  the  political  and  economic  system,  however,  which  had 
fastened  itself  on  the  country  in  the  course  of  time,  growth 
was  hampered;    and  opposition  rose  until  it  burst  out  finally 
in  the  Revolution  of  1789.    Then  followed  a  period  of  twenty- 
five  years  of  rapid  political  change  and  of  bitter  war,  ending 
finally  with  the  defeat  of  Napoleon  in  1815. 

496.  Effect  of  the  Revolution.  —  The  losses  of  France 
during  this  period  in  men,  money,  and  colonial  territory  need 
only  to  be  suggested;  the  effect  of  the  wars  on  French  commerce 
has  already  been  described.     It  is  proper  here  to  emphasize 
the  good  of  the  Revolution.    In  appearance,  at  least,  it  swept 
away  all  the  old  institutions,  and  liberated  the  people  from 
burdens  which  they  had  been  bearing  for  centuries.    It  abol- 
ished the  former  class  divisions  and  inequalities  in  taxation; 
it  freed  the  agricultural  classes,  and  extended  the  ownership 
of  land;    it  amended  the  former  restrictions  on  the  pursuit 
of  manufactures  and  handicrafts;    and  it  established  perfect 
freedom  of  trade  inside  the  country. 

422 


FRANCE  423 

497.  Backward  features  of  industry  and  commerce.  —  No 

country  can  make  an  entire  breach  with  its  past,  and  France 
after  1815  was  more  like  France  before  1789  than  the  reader 
may  suppose.  The  people  had  not  acquired  the  skill  and 
boldness  in  industry  and  commerce  which  the  English  had 
won  by  generations  of  experience.  The  government  after  1815 
was  still  highly  centralized,  with  strong  absolutist  tendencies, 
and  moved  more  by  personal  influences  than  by  far-sighted 
views  of  the  welfare  of  the  whole  people.  These  facts  appear 
in  the  course  of  commercial  policy  followed  after  the  Restora- 
tion. France  had  made  only  the  barest  beginnings  in  the 
modern  industries  depending  on  coal  and  iron,  and  on  the 
application  of  machinery,  at  the  time  of  the  Revolution,  and 
though  industries  developed  when  commerce  was  interrupted 
by  war,  they  were  weak  in  organization  and  technique,  and 
loudly  demanded  protection  when  peace  returned,  and  oppor- 
tunities for  commerce  developed. 

498.  The  French  tariff  in  the  first  part  of  the  century.  — 
The  result  was  a  tariff  system  which  goes  far  to  explain  the 
sluggish  development  of  French  commerce  in  the  first  part  of 
the  nineteenth  century.    It  gave  protection  to  shipping,  to 
agricultural  products,  from  wheat  to  sumac  and  garden  roses, 
to  the  raw  materials  as  well  as  the  finished  products  of  industry. 
Colbert's  tariff  of  1664  and  1667  has  often  been  cited  as  an 
example  of  high  protection,   but  the  French  tariffs  of  the 
period  before  1850  imposed  still  higher  duties  on  some  of  the 
most  important  raw  materials  of  industry  (wool,  cotton,  flax, 
pig  and  bar  iron,  steel,  alum);  many  duties  had  risen  to  a  pro- 
hibitive height,  and  there  were  many  actual  prohibitions. 

499.  Sluggishness  of  industrial  development.  —  At  the 
time  when  England  was  building  up  her  system  of  manufac- 
tures, when  every  decade  was  marked  by  some  important  step 
in  industrial  progress,  France  resolutely  excluded  herself  from 
the  influences  which  would  have  stimulated  progress  at  home. 
While  England  was  endeavoring  to  keep  her  improved  ma- 
chinery in  the  country,  by  forbidding  export,  France  aided  her 


'424  A  HISTORY  OF  COMMERCE 

by  imposing  on  machinery  duties  running  up  to  100  per  cent. 
.Means  to  spin  linen  by  machinery  were  invented  by  a  French- 
man, Girard,  in  1810,  but  were  first  utilized  in  England;  and 
.England  could  show  nearly  a  million  and  a  half  spindles  in 
1849,  against  a  quarter  of  a  million  in  France.  A  Frenchman 
-estimated  in  1827  that  the  steam-engines  in  Great  Britain 
.amounted  to  a  force  of  6,400,000  laborers,  while  they  amounted 
in  France  to  but  480,000.  About  1840  there  were  still  less 
•than  2,000  steam-engines  in  France.  The  French  iron  industry 
was  far  behind  the  English  in  efficiency  and  in  output,  but 
was  secured  the  home  market  by  protective  duties,  and  built 
•up  large  fortunes  for  the  iron  producers  at  a  direct  loss  to  the 
^country  estimated  to  be  $10,000,000  a  year,  and  an  indirect 
Joss  far  larger. 

500.  Effect  of  the  tariff  on  commerce.  —  The  effect  of  the 
-tariff  in  checking  commerce  between  the  two  great  states  in 
this  period  can  be  seen  in  the  fact  that  in  1829  less  than  one 
seventieth  of  British  exports  were  declared  for  France;  England 
found  better  customers  in  Spain,  in  Turkey,  or  in  Chile.    The 
•amount  of  trade  was  in  fact  somewhat  larger,  for  smugglers 
•evaded  the  restrictions  of  the  tariff,  and  by  a  number  of  in- 
genious devices  (including  the  use  of  trained  dogs),  succeeded 
in  bringing  wares  to  the  people  who  wanted  them. 

This  one  example  indicates  how  the  French  were  losing  the 
opportunities  for  commercial  expansion  which  this  period  offered 
to  them  as  to  other  peoples.  No  more  striking  commentary 
on  the  history  of  the  commerce  of  France  at  this  time  can  be 
furnished  than  the  following  fact:  nearly  sixty  years  after  the 
French  Revolution  the  special  commerce  of  the  country  was 
only  just  beginning  to  exceed  the  figures  which  it  had  attained 
-at  the  earlier  date. 

501.  Reform  of  the  tariff  by  Napoleon  m.  —  The  astonish- 
ing increase  of  French  commerce  in  the  decade  1850-1860  (from 
less  than  two  to  over  five  milliards  of  francs)  was  due  chiefly 
to  the  reform  of  the  tariff  by  Napoleon  III.    Attempts  before 
this  time  to  lower  duties  had  failed  because  of  the  determined 


FRANCE  425 

resistance  and  the  strong  political  organization  of  tne  pro- 
tectionists, but  the  new  Emperor  enjoyed  a  position  of  excep- 
tional strength,  and  was  not  fettered  by  the  dependence  on 
the  manufacturing  class  which  had  stopped  action  by  the 
previous  government.  By  his  mere  decrees  he  lowered  or 
suspended  duties  on  agricultural  products  and  on  important 
raw  material  (coal,  iron,  steel,  wool,  etc.). 

502.  Effect  of  the  reform  on  commerce.  —  French  industry 
and  commerce,  checked  so  long  in  their  development,  responded 
with  surprising  quickness.    In  a  period  of  little  over  ten  years, 
(1847-1859)  the  steam  power  of  France  increased  over  three- 
fold.    The  commerce  with  England,  which  in  the  previous, 
period  of  twenty  years  had  merely  doubled,  now  quintupled 
in  ten  years.     With  Portugal  and  Greece  commerce  quad- 
rupled;   with  Germany,  Switzerland,  Brazil,  etc.,  it  tripled; 
with  Belgium,  the  Netherlands,  Spain,  Italy,  the  United  States, 
etc.,  it  doubled.     French  commerce  recovered  its  lost  ground 
so  quickly  that,  according  to  a  French  estimate,  it  amounted 
to  more  than  three-fifths  of  English  commerce  about  I860, 
and  the  country  took  easily  second  place  among  the  trading 
countries  of  Europe. 

503.  The  free-trade  treaty  of  1860,  —  At  the  end  of  the 
decade  which  we  have  been  studying,  in  1860,  the  movement 
toward  greater  freedom  of  trade  progressed  still  another  stage 
by  the  ratification  of  a  treaty  of  commerce  between  France  and 
England.     Free  traders,  of  whom  Richard  Cobden  was  the 
chief,  convinced  the  Emperor  that  France  would  benefit  by  a 
further  reduction  of  duties.     Cobden  asserted  that  French 
operatives  worked  20  per  cent  more  time  for  20  per  cent  less 
wages,  and  paid  upwards  of  10  per  cent  more  for  their  clothing 
than  the  same  class  in  England;   and  promised  the  Emperor 
that  the  French  would  share  in  the  advantages  of  the  English 
if  they  would  only  adopt  a  similar  commercial  policy.     The 
Emperor,  moreover,  was  desirous  of  winning  the  good-will  and 
support  of  the  English  to  strengthen  his  international  position; 
and  agreed  to  the  proposals  partly  on  this  account.    England 


426  A  HISTORY  OF  COMMERCE 

abolished  the  duties  on  a  number  of  articles  of  French  origin, 
and  reduced  the  duties  on  wine  and  spirits;  while  France 
removed  all  prohibitions  on  trade,  and  scaled  duties  down  to 
about  half  their  former  amount  in  commerce  between  the  two 
countries.  This  treaty,  which  was  to  last  ten  years  from  its 
ratification  in  1860,  is  one  of  the  turning-points  in  European 
commercial  policy;  it  marked  the  extension  of  the  free-trade 
movement  from  England  to  the  other  states  of  Europe;  and  it 
inaugurated  a  succession  of  similar  treaties  on  the  part  of 
France  and  other  states  on  the  Continent. 

504.  Results  of  the  treaty  of  1860.  —  There  had,  of  course, 
been  opposition  in  France  to  the  further  reduction  of  duties; 
and  many  people  prophesied  that  the  movement  to  free  trade 
would  entail  the  industrial  ruin  of  the  country.     The  results 
did  not  justify  these  predictions.    Commerce  expanded  greatly, 
as  was  to  be  expected;   it  grew  in  the  period  1859-1869  from 
5.4  to  8  or  from  3.9  to  6  milliards  of  francs,  according  as  the 
general  or  special  trade  of  the  country  is  taken  as  the  standard 
of  measurement.    This  commerce,  however,  was  serving  French 
industry  and  agriculture,  and  not  destroying  them.     There 
was  a  marked  increase  in  the  importation  of  the  raw  materials 
of  industry;    the  amount  of  wool  and  silk  brought  into  the 
country  for  manufacture  more  than  doubled  in  ten  years,  and 
in  spite  of  the  disastrous  effects  of  the -American  Civil  War 
there  was  a  considerable  increase  in  the  importation  of  cotton. 
The  use  of  coal  and  iron,  both  important  indexes  of  industrial 
development,  extended  largely;  and  the  population  engaged  in 
industry  and  commerce  grew  by  nearly  a  million  workers  in 
the  period  1861-1866.    The  increase  in  the  products  of  French 
industry  found  a  market  both  abroad  and  at  home.     The 
exports  of  manufactures  increased,  it  is  true,  but  slowly  except 
in  the  case  of  special  products;  but  the  consumption  of  manu- 
factures within  the  country  extended  greatly,  as  new  purchasers 
appeared  for  wares  which  formerly  had  been  beyond  their  means. 

505.  Return  to  protection  after  the  war  with  Germany.  — 
It  has  long  been  the  misfortune  of  France  to  have  her  com- 


FRANCE  427 

mercial  and  industrial  interests  at  the  mercy  of  politics;  and 
at  this  point  in  her  growth  her  progress  was  stayed  by  the 
outbreak  of  the  great  war  with  Germany.  From  the  direct 
losses  of  the  war  the  country  recovered  with  a  quickness 
surprising  to  those  who  did  not  realize  the  thrift  and  saving 
power  of  the  French  people.  The  war  led,  however,  to  the 
overthrow  of  the  government  of  Napoleon  III,  and  in  time  to 
the  overthrow  also  of  the  liberal  commercial  system  which  he 
had  established.  Though  the  commercial  treaties  were  allowed 
to  continue  for  a  few  years,  the  tendency  was  strongly  toward 
protection.  It  was  a  period  of  bad  times  in  business,  and 
French  agriculture  was  beginning  to  feel  the  competitition  oi 
countries  outside  of  Europe;  the  new  French  republic,  with  all 
its  merits,  lent  itself  too  easily  to  the  representation  of  class 
and  sectional  interests. 

506.  Growth  of  protective  duties.  —  In  1881,  therefore,  a 
new  tariff  was  established,  which  raised  many  duties  about 
one  quarter,  though  it  allowed  many  of  the  higher  rates  to  be 
abated  by  treaties  with  other  states.     Proposals  to  increase 
duties  now  multiplied.     Not  only  manufacturing  industry  but 
also  agriculture  became  clamorous  for  protection.     The  duty 
on  a  quintal  (about  220  pounds)  of  wheat,  which  had  been  60 
centimes  since  1861,  was  raised  to  3  francs  in  1884,  to  5  in  1887, 
to  7  in  1894.     While  in  the  past  the  agriculturists  had  been 
free  traders  they  had  become  by  1890  almost  a  unit  for  pro- 
tection, whether  they  raised  wheat  or  cattle,  grapes  or  sugar- 
beets,  hemp  or  flax.    In  1892  an  entirely  new  tariff  was  adopted, 
considerably  higher  than  that  of  1881,  affecting  some  impor- 
tant raw  materials,  and  not  affording  the  same  freedom  in  the 
negotiation  of  commercial  treaties. 

507.  Attitude  of  the  French  toward  commerce.  —  A  writer 
who  published  a  study  of  the  French  tariff  system  in  1892 
thought  that  public  opinion  would  force  a  revision  of  the 
recent  tariff  if  it  checked  the  country's  commerce.    Such  was 
actually  its  result.    Exports  and  imports  did  not  reach  again  the 
figures  of  1892  for  five  and  six  years  respectively.    Neverthe- 


428  A  HISTORY  OF  COMMERCE 

less  the  protective  duties  were  raised  again  in  1910  to  a  level 
.far  above  that  which  prevailed  in  the  neighboring  states  of 
northwestern  Europe.  The  French  had  to  choose  between  a 
career  in  commerce  and  the  maintenance  of  the  traditional 
organization.  They  could  not  extend  their  trade  without 
lowering  the  barriers  of  their  tariff.  This  step  they  were  un- 
willing to  take,  apparently  because  it  would  have  entailed 
efforts  and  sacrifices  in  the  readjustment  of  their  industries. 
The  caution  and  disinclination  to  change,  which  mark  the  great 
peasant  population  of  the  country,  appear  to  have  determined 
the  course  of  commercial  policy,  and  to  have  decided  the  French 
to  hold  fast  to  what  they  had,  rather  than  to  take  the  chances 
involved  in  a  struggle  for  a  higher  place  in  the  open  market 
•of  the  world.  In  such  a  struggle  they  were  at  a  disadvantage, 
because  of  the  scarcity  of  their  mineral  resources  and  still 
more  because  of  the  many  backward  features  in  their  industrial 
-organization.  On  the  other  hand  they  could  comfort  themselves 
with  the  reflection  that  few  if  any  of  the  neighboring  states 
were  qualified  as  were  they  to  renounce  the  possible  benefits 
of  trade.  The  great  agricultural  resources  of  the  country  make 
possible  an  approach  to  self-sufficiency  which  elsewhere  could 
not  be  considered. 

508.  Statistics  of  French  commerce  in  the  recent  period.  — 
The  table  on  page  429,  presenting  the  course  of  French  commerce 
in  the  period  immediately  preceding  the  outbreak  of  the  World 
War,  illustrates  what  has  been  said  regarding  the  checks  im- 
posed on  commercial  expansion;    and  provides  the  means  of 
comparison  with  the  commercial  development  of  other  countries. 

509.  Position  of  France  in  recent  commerce.  —  In  matters 
of  taste  and  of  artistic  finish,  in  which  personal  aptitude  and 
training  are  the  important  factors,  the  French  remained  un- 
rivaled;   in  production  on  a  large  scale,  in  which  elaborate 
organization  and  the  extensive  use  of  machinery  determine 
success,  the  French  did  not  compare  with  English,  Germans,  or 
Americans.     Thus  the  French,  though  always  assured  a  re- 
spectable position  in  the  commerce  of  the  world,  could  not 


FRANCE 


429- 


SPECIAL  COMMERCE  OF  FRANCE,  SELECTED  YEARS  IN  MILLIARDS 
OF  FRANCS  AND  OF  DOLLARS. 


Imports 

Exports 

Francs 

Dollars 

Francs 

Dollars 

1870  

2.9 
5.0 

4.4 
4.7 

7.2 
8.4 

.6 
1.0 
.9 
.9 
1.4 
1.6 

2.8 
3.5 
3.8 
4.1 
6.3 
6.9 

.5 

.7 
.7 
.8 
1.2 
1.3 

1880  

1890  

1900  

1910  

1913  

hope  to  share  the  progress  which  other  nations  attained  by 
the  export  of  cheap  manufactures  in  great  quantities.  An 
Englishman  said  of  the  trade  between  his  country  and  France 
in  1878,  "Broadly  it  may  be  said  France  supplies  us  with  our 
luxuries,  and  we  minister  to  the  necessities";  even  at  the  close 
of  the  century  this  held  true,  in  general,  of  the  relations  be- 
tween France  and  the  other  great  countries.  France  supplied 
objects  of  art,  luxury,  and  fashion,  delicacies  and  wines,  and 
took  from  others  in  exchange  the  articles  of  solid  utility,  the 
product  of  mines  and  of  power  machinery. 

510.  Failure  of  the  government  in  its  attempts  to  stimulate 
commerce.  —  Attempts  of  the  French  government  to  stimulate 
commercial  expansion  have  not  met  the  expectations  of  their 
promoters.  The  government  has  built  up  a  colonial  empire 
about  sixteen  times  as  large  as  France,  but  most  of  the  depen- 
dencies are  in  a  backward  condition,  and  their  total  commerce 
(including  that  of  Algiers)  was  before  1914  only  about  one- 
quarter  of  that  of  France.  So  far  France  has  lost  money  on 
her  colonial  enterprises,  and  there  seems  no  likelihood,  in 
view  of  the  extremely  small  emigration  from  the  home  country, 
that  she  will  recover  it.  Nor  can  the  results  of  attempts  to 
build  up  the  merchant  marine  be  regarded  as  satisfactory. 
Measures  to  protect  French  shipping,  which  disappeared  to 


430  A   HISTORY  OF  COMMERCE 

a  large  extent  during  the  period  of  the  movement  to  free  trade, 
have  been  resorted  to  again  since  1880,  and  have  led  to  the 
payment  of  two  to  four  million  dollars  a  year  to  aid  the  build- 
ing and  renewing  of  French  ships.  They  have  done  no  more 
than  keep  the  French  fleet  stationary  while  other  merchant 
marines  were  rapidly  advancing,  and  seem  to  have  hurt  rather 
than  helped  the  interests  of  French  commerce.  It  is  note- 
worthy that  of  the  total  output  of  merchant  ships  in  France 
in  1901,  70  per  cent  of  the  tonnage  was  in  the  form  of  sailing 
vessels,  a  means  of  transportation  now  out  of  date  for  most 
purposes  of  foreign  commerce;  and  that  two-fifths  of  the  total 
tonnage  under  the  French  flag  in  1912  were  in  the  form  of 
sailing  ships. 

QUESTIONS  AND  TOPICS 

1.  Burdens  from  which  French  commerce  and  industry  were  freed 
by  the  Revolution.    ["Review  chap.  25,  above;  Rand,  EC.  hist.,  chap.  3; 
Adams,  Growth,  chap.  15.] 

2.  Hayti  as  a  French  colony  and  as  an  independent  state.    [A.  K.  Fiske 
chap.  20  ff.;   Spenser  St.  John,  Hayti,  Lond.,  1884,  chaps.  2,  3,  10.] 

3.  Backward   political   condition   of   France   after   1815.     [Adams, 
Growth,  chap.  18;    Seignobos,  chap.  5.] 

4.  Write  a  report  on  one  of  the  following  topics  in  French  commerce, 
about   1850:    import  and  export  trade,   manufactures,   customs  tariff, 
colonial  system.     [Homans,   Cyclopedia,  p.  710  ff.]. 

5.  France  under  Napoleon   III.     [Seignobos,   chap.   6.] 

6.  The  commercial  treaty  of  1860.     [McCarthy,  Hist.,  vol.  2,  chap. 
41;    Morley,  Cobden,  chap.  32.] 

7.  What  is  the  difference  between  "general"  and  "special"  com- 
merce?    [Statesman's  Year-Book,  France,  Commerce.] 

8.  France  under  the  third  republic.    [Seignobos,  chap.  7.] 

9.  The   protectionist  reaction.     [Herbert  A.    L.    Fisher,   in  Econ. 
Journal,  1896,  6:    341-355.] 

10.  The  situation  of  France  in  international  commerce.    [Lebon,  in 
International  Monthly,  1901,  3:   252-273.] 


CHAPTER  XLTI 
MINOR   STATES   OF   CENTRAL  AND   NORTHERN   EUROPE 

511.  States   of  minor  commercial   importance.  —  In  the 
year  1912  four  great  states  carried  on  nearly  one-half  of  the 
foreign  commerce  of  the  world,  considerably  more  than  one- 
half  if  their  dependencies  be  counted  with  them.     Three  of 
these,  England  (including  the  British  Empire),  Germany,  and 
France,  have  already  formed  the  subject  of  study,  and  the 
fourth,  the  United  States,  will  be  considered  at  length  in  a 
later  section.    We  must  now  attend  to  the  commercial  develop- 
ment in  other  countries,  reviewing  their  history  more  briefly 
as  accords  with  their  minor  importance.     We  shall  take  up 
first  two  countries,  the  Netherlands  and  Belgium,  which  stand 
not  far  below  the  leaders,  and  which  would  even  rank  high 
among  them  but  for  their  small  size.    It  may  not  be  unneces- 
sary to  remind  the  reader  that  Belgium  is  a  creation  of  the 
nineteenth  century;  the  country  had  formed  a  province  subject 
to  Spain  or  Austria  until  the  period  of  the  French  Revolution 
when  it  was  for  a  time  incorporated  in  France,  then  (1815) 
joined  to  the  Netherlands  in  a  single  kingdom,  and  finally,  in 
1830,  established  d,s  an  independent  state. 

512.  Commerce  of  the  Netherlands  to  1830.  —  Dutch  com- 
merce had  long  passed  its  best  days  when,  toward  the  close  of 
the  eighteenth  century,   it  received  what  seemed  to  be  its 
death  blow  in  the  war  with  England,  growing  out  of  the  Amer- 
ican war  of  independence.    Before  the  Netherlands  had  begun 
to  recover  from  its  reverses  it  was  engulfed  in  the  movements 
of  the  French  Revolution;   was  conquered  and  heavily  taxed 
by  the  French;    suffered  under  the  ban  of  Napoleon's  conti- 
nental system;   and  lost  for  a  time  its  most  valuable  colonial 

431 


432  A  HISTORY  OF  COMMERCE 

possessions.  At  the  close  of  the  wars,  in  1815,  it  recovered  its 
colonies,  except  Ceylon,  the  Cape  of  Good  Hope,  and  parts  of 
Guiana,  which  remained  in  the  possession  of  the  English,  but 
it  could  not  recover  its  former  commercial  position.  Other 
peoples  had  learned  to  do  for  themselves  what  the  Netherlands 
had  once  done  for  them  as  a  merchant  and  carrier;  and  Amster- 
dam and  Rotterdam  saw  their  commerce  pass  to  London, 
Hamburg,  and  other  ports.  In  striking  contrast  with  the  earlier 
period  the  Netherlands  had  in  1824-5  only  7  large  ships  under 
construction  while  England  had  about  800.  The  union  with 
the  Belgian  provinces,  lasting  from  1815  to  1830,  increased 
the  area  and  the  internal  trade  of  the  country,  but  was  a 
hindrance  rather  than  a  help  to  the  development  of  foreign 
commerce.  The  Belgian  industries  required  protection,  and 
the  tariff,  framed  to  meet  both  their  demands  and  a  protection- 
ist sentiment  in  the  Netherlands  which  had  grown  up  in  the 
period  of  decline,  hampered  free  commercial  relations  with 
other  states. 

513.  Dutch  commerce  since  1830.  —  The  Netherlands,  even 
after  the  separation  of  Belgium  in  1830,  clung  to  the  protective 
tariff,  and  remained  outside  the  great  current  of  commerce. 
A  colonial  policy  known  as  the  culture-system,  adopted  in 
their  East  Indian  possessions,  especially  Java,  returned  a  large 
revenue  to  the  government,  but  prevented  commercial  develop- 
ment there,  while  the  West  Indian  possessions  suffered  severely 
from  the  lack  of  labor  following  the  abolition  of  slavery. 
Meanwhile,  however,  a  movement  for  freft  trade  had  grown 
up  which  resulted,  after  1850,  in  a  lowering  of  tariff  rates  until 
they  were  little  more  than  nominal  in  amount.  The  growth 
of  the  European  railway  system  gave  to  the  Netherlands 
a  new  importance  as  a  place  of  import  for  wares  destined  for 
central  Europe;  and  the  country  profited  largely  by  the  growth, 
on  either  side,  of  the  two  great  industrial  powers,  England  and 
Germany.  In  the  last  half  of  the  century  the  growth  of  the 
Dutch  commerce  has  been  rapid  and  nearly  constant.  The 
annual  value  of  the  total  special  trade  (exports  plus  imports, 


CENTRAL  AND  NORTHERN  MINOR  STATES    433 

in  this  case  including  the  precious  metals)  was  as  follows  at 
ten-year  intervals  from  1850  to  1910,  in  milliards  of  dollars: 
.1,  .2,  .2,  .6,  1.0,  1.5,  2.4.  Figures  for  the  general  trade  of  the 
country,  including  goods  imported  and  then  re-exported,  would 
be  considerably  larger. 

514.  Position  of  the  Dutch  in  recent  commerce.  —  The 
Netherlands  suffers  from  a  lack  of  mineral  resources,  as  the 
country  is  largely  "made"  land,  composed  of  sand  and  silt 
which  the  great  rivers  have  deposited  at  their  entrance  to  the 
sea.     The  Dutch,  therefore,  have  been  handicapped  in  their 
attempts  to  share  in  the  development  of  modern  industry, 
and  find  in  agriculture  rather  than  in  manufacturing  their 
chief  occupation.      They   have   succeeded  in   certain   special 
manufactures  (diamond-cutting,  chocolate,  oleomargarine),  in 
gaining  a  leading  place,  but  cannot  compete  with  other  nations 
in  the  staple  machine  industries.     They  produce  a  surplus  of 
dairy   products   for   export,   and   import   raw   materials   and 
manufactures  which  cannot  be  produced  in  sufficient  quantity 
at  home;    but  the  striking  feature  of  their  trade  is  the  fact 
that  in  general  the  same  products  appear  among  both  the 
imports  and  the  exports.    The  Dutch,  favored  by  their  national 
training  and  geographical  position,  and  diverted  from  other 
means  of  livelihood  by  lack  of  resources,  are  the  middlemen 
of  Europe,  arranging  exchanges  between  other  countries. 

515.  Belgium :   early  industrial  development.  —  Belgium  is 
far  more  richly  endowed  with  mineral  resources;  in  spite  of  its 
small  area  it  produced  in  1912  more  than  half  as  much  coal  as 
France,  and  has  also  rich  supplies  of  ore  of  iron,  and  other  metals. 
Even  before  the  full  value  of  these  resources  was  realized 
Belgium  was  a  distinctly  industrial  state,  and  for  many  centuries 
Flanders  and  other  districts  have  been  noted  for  their  manu- 
factures.   Belgium  did  not  suffer,  therefore,  as  did  the  Nether- 
lands, from  the  period  of  French  occupation;   it  was  freed  by 
the  French  from  many  trammels  on  industry  dating  from  the 
gild  period,  and  it  found  in  France  a  market  for  its  manu- 
factures which  enabled  it  to  endure  the  restrictions  of  the 


434  A  HISTORY  OF  COMMERCE 

Continental  System.  During  the  period  of  union  with  the 
Netherlands  (1815-1830)  Belgian  industries  continued  to 
develop,  with  the  aid  of  Dutch  capital,  commerce,  and  colonies; 
the  districts  represented  by  Ghent,  Brussels,  Charleroy,  and 
Liege  became  widely  known  for  the  manufacture  of  textiles, 
iron  wares,  etc.  Progress  was  checked  for  a  time  by  the 
breach  with  the  Netherlands  (1830),  but  this  was  just  the 
period  when  steam  began  to  be  applied  to  manufactures  and 
to  railroads,  and  with  the  aid  of  this  new  force  Belgium  quickly 
recovered  her  former  position.  The  prosperity  of  Antwerp, 
the  one  important  port  of  modern  Belgium,  was  seriously 
threatened  by  the  act  of  the  Dutch  in  closing  the  Scheldt  to 
navigation;  but  the  Belgians  were  willing  to  pay  for  this  means 
of  access  to  the  sea,  and  finally  bought  outright  the  privilege 
of  using  it. 

516.  Belgian  commercial  policy.  —  During  the  first  decades 
of  Belgian  independence  the  tariff  which  had  been  inherited 
from  the  period  of  Dutch  rule  was  made  more  strict,  and 
before  the  middle  of  the  century  it  had  been  changed  so  as  to 
grant  considerable  protection  to  agriculture,  industry,  and  the 
carrying  trade.     Belgium,  however,  like  the  Netherlands,  is 
too  small  a  country  to  be  able  to  afford  high  protection.    After 
1850  a  free-trade  movement  led  to  lower  duties  and  to  liberal 
commercial  treaties,  the  policy  which  has  since  been  followed 
in  the  main.    Many  influences  were  at  work  in  this  period  to 
further  commerce,  chief  among  them  the  technical  improve- 
ments in  manufactures  and  transportation;   so  it  is  dangerous 
to  argue  that  the  prosperity  of  Belgium  in  the  following  period 
was  due  to  the  policy  of  greater  freedom  of  trade.    It  is  certain, 
however,  that  Belgian  commerce  could  not  have  attained  the 
development  it  did  without  this  policy. 

517.  Survey  of  the  recent  development  of  Belgian  com- 
merce. —  Giving  figures  roughly  in  millions  of  dollars,  the 
total  commerce  rose  in  the  protectionist  period,  1840  to  1850, 
from  70  to  80.    Tn  the  following  ten  years  of  transition  it  rose  to 
190;    in  1880,  after  twenty  years  of  nearly  free  trade,  it  had 


CENTRAL  AND  NORTHERN  MINOR  STATES    435 

risen  to  560,  and  in  the  decades  since  then  the  figures  have  been 
600,  856  and  1480.  To  this  commercial  expansion  the  port  of 
Antwerp  owed  its  position  as  second  only  to  Hamburg  among 
the  ports  of  the  Continent.  An  analysis  of  the  different  items 
of  which  the  recent  trade  of  the  Belgians  was  composed  shows 
that  their  strong  exporting  industries  were  manufactures  (yarns 
and  textiles,  iron,  glass,  etc.),  while  they  were  obliged  to  im- 
port a  large  part  of  their  food  supply,  and  of  the  raw  materials 
for  their  industries. 

518.  Switzerland :   obstacles  to  industrial  development.  — 
Another  country,  small  in  area  but  with  a  commerce  exceeding 
that  of  many  greater  states,  is  Switzerland.    With  its  agricul- 
tural capabilities  restricted  by  the  area  covered  by  mountains, 
and  with  no  important  mineral  resources,  Switzerland  has  to 
depend  upon  the  character  of  its  people  as  its  chief  industrial 
asset.    In  the  early  part  of  the  nineteenth  century  it  suffered 
not  only  from  the  restrictive  tariffs  of  the  states  surrounding 
it,  but  also  from  the  fact  that  it  had  itself  not  become  a  political 
unit,  and  was  cut  into  small  pieces  by  dues  and  tolls  on  trade. 
The  hindrances  to  internal  trade  were  finally  swept  away  in 
1848,  when  Switzerland  became  a  federal  republic;    and  the 
people  made  use  of  their  greater  freedom  at  home  and  of  the 
lowering  of  tariff  rates  abroad  to  extend  their  commerce  rapidly. 

519.  Position  of  the  Swiss  in  recent  commerce.  —  Switzer- 
land has  developed  almost  entirely  along  the  line  of  manufac- 
tures.    The  agricultural   population  has   actually  decreased 
since  1870,  as  it  has  become  easier  to  purchase  food  products 
from  abroad  by  the  export  of  manufactured  products :  silk  and 
cotton  textiles,  clocks  and  watches,  etc.  Swiss  industries  have 
not   reached   the   development   of  those   in   more   advanced 
countries,  and  much  of  the  work  is  still  done  outside  of  factories, 
and  with  simple  home  machinery.     These  conditions  imply 
hard  work  and  low  returns,  but  the  Swiss  must  choose  between 
securing  in  this  way  some  share  in  the  world's  commerce,  or 
starving  in  the  vain  attempt  to  support  themselves  by  the 
scanty  resources  of  their  own  country. 


436  A  HISTORY  OF  COMMERCE 

520.  Austria-Hungary:     survey   of   commercial   develop- 
ment. —  The  state  of  Austria-Hungary,  though  it  was  in  size 
the  third  in  Europe,  ranked  only  seventh  in  commerce  in  1912, 
taking   place   after   the   Netherlands,    Belgium,  and  Russia. 
Reference  to  an  earlier  chapter,  describing  conditions  before 
1800,  will  suggest  that  Austria-Hungary  entered  the  nineteenth 
century  handicapped  by  its  economic  and  political  conditions. 
It  required  roughly  a  full  half  of  the  century  to  remove  the 
more  serious  obstacles  to  progress,  and  the  latter  half  of  the 
century  has  not  given  time  enough  to  enable  the  people  to 
win  a  place  with  their  more  advanced  neighbors  of  the  West 
of  Europe. 

521.  Obstacles  to  the  growth  of  commerce  and  industry.  — 
Of  the  difficulties  under  which  commerce  labored  the  following 
are  among  the  most  important:    (a)  the  character  of  the  gov- 
ernment, which  was  a  personal  absolutism  like  that  in  France 
before  the  French  Revolution,  absorbed  by  the  family  interests 
of  the  ruling  house  and  by  questions  of  foreign  policy,  and 
attending  but  slightly  to  the  interests  of  the  people  as  a  whole; 
(6)   the  system  of  prohibitive,  tariffs,  which  was  maintained 
more  strictly  than  in  any  other  state  of  central  Europe;   (c)  the 
separation  of  different  parts  of  Austria-Hungary  by  tolls  and 
tariffs;    (d)  the  slight  development  of  manufacturing  industry, 
due  not  to  the  lack  of  natural  resources  but  to  the  backward- 
ness of  the  people  and  to  the  persistence  of  restrictions  dating 
from  the  period  of  the  gilds. 

522.  Gradual  removal  of  these  obstacles.  —  (a)  The  revolu- 
tion of  1848  began  a  movement  for  constitutional  government, 
which  led  in  time  to  the  fall  of  absolutism  and  the  introduction 
of  modern  representative  assemblies.    At  the  same  time,  how- 
ever the  spirit  of  nationalism  was  awakened  among  the  various 
peoples,  and  their  conflicting  claims  (especially  in  Hungary 
and  in  Bohemia)  have  seriously  affected  the  working  of  the 
parliamentary  system.    (6)  The  prohibitive  system,  which  had 
absolutely  excluded  the  most  important  manufactures  or  had 
allowed  them  to  be  imported  only  as  a  special  favor  and  by 


CENTRAL  AND  NORTHERN  MINOR  STATES    437 

payment  of  high  duties,  was  abandoned  after  1848  for  a  more 
moderate  system  of  protection,  and  commercial  treaties  with 
various  states  were  made  to  facilitate  the  movement  of  wares, 
(c)  The  freedom  of  internal  trade  was  secured  for  the  Austrian 
half  of  the  monarchy  in  1826,  and  for  the  whole  state  (with 
slight  exceptions)  in  1851.  (d)  The  restrictions  on  industry 
continued  even  after  1850.  A  man  could  not  exercise  any 
trade  requiring  the  use  of  a  machine,  or  any  but  the  simplest 
household  employments,  without  securing  a  public  license;  a 
man  might  exercise  only  one  trade,  and  a  cabinet-maker  might 
not  upholster  the  furniture  he  made,  nor  might  a  baker  make 
confectionery.  Most  of  these  restrictions  were  abolished  in 
1860. 

523.  Growth  of  commerce  since  1850.  —  Commerce  and 
industry,  which  had  developed  with  exceeding  slowness  before 
1850,  were  quick  to  respond  to  the  change  in  conditions,  aided 
by  the  extension  of  the  railroad  system  which  marked  this 
period.     In  spite  of  heavy  taxes  and  a  depreciated  paper 
currency  there  was  an  extraordinary  increase  of  energy  and 
growth  of  business.     Foreign  trade  more  than    doubled  in 
twenty  years,  and  each  part  of  the  monarchy  developed  along 
the  line  of  its  strongest  resources;  the  Austrian  lands,  especially 
Bohemia,  extended  their  mines  and  built  up  their  backward 
manufactures,  while  the  Hungarian  lands  exported  increasing 
quantities  of  agricultural  products  (wheat,  flour,  stock,  etc.). 
A  reaction  toward  protection,   felt  since  the  ;70's,  did  not 
check  the  growth  of  commerce;    a  more  serious  danger  ap- 
peared to  be  the  possibility  that  a  tariff  barrier  would  again 
be  established  between  the  two  parts  of  the  monarchy  as  the 
result  of  the  national  aspirations  of  the  Hungarians. 

524.  Position  of  Austria-Hungary  in  recent  commerce.  — 
Austria-Hungary  carried  on  by  far  the  largest  part  of  its  com- 
merce with  its  neighbor,  Germany,  and  found  the  greatest 
hope  of  the  future  in  building  up  the  trade  with  the  Balkan 
states,  and  along  the  route  to  Salonika  and  Constantinople. 
Hampered  by  its  position,  it  has  not  succeeded,  in  spite  of 


438  A  HISTORY  OF  COMMERCE 

generous  bounties,  in  developing  its  shipping  trade  to  important 
proportions.  The  first  ships  to  pass  through  the  Suez  canal  in 
1869  were  three  steamers  of  the  Austrian  Lloyd,  but  in  1913 
less  than  one  twentieth  of  the  tonnage  using  the  canal  was 
Austrian.  The  two  ports  that  served  the  monarchy,  Triest 
for  the  Austrian  part  and  Fiume  for  the  Hungarian,  were  fa- 
vored by  every  sort  of  assistance  that  the  government  could 
render,  but  remained  still  ports  of  the  second  class,  surpassed 
in  importance  by  a  score  of  other  ports  in  Europe. 

525.  The  Scandinavian  states;    their  position  in  recent 
commerce.  —  The  Scandinavian  states  (Sweden,  Norway,  Den- 
mark) held  a  lower  rank  among  commercial  countries  than 
others  which  will  be  mentioned  later,  but  in  a  geographical 
grouping  they  may  be  properly  considered  here;    and  their 
commerce  was  important,  at  least,  in  proportion  to  the  irrela- 
tively small  population.     These  states  were  characterized,  in 
general,  by  a  lack  of  coal  and  by  the  slight  development  of 
manufactures;   and  by  a  soil  and  climate  which  are  disadvan- 
tageous to  the  ordinary  operations  of  agriculture.    The  diffi- 
culties of  life  have  forced  many  inhabitants  to  emigrate,  and 
forced  those  who  stayed  at  home  to  make  the  most  of  their 
extractive  industries  (forestry,  mining,  dairying),  the  products 
of  which  they  could  exchange  for  the  wares  of  more  favored 
nations.     The  time  when  the  Baltic  trade  was  one  of  the 
great  branches  of  world  commerce  was  long  past.     The  rest 
of  Europe  would  have  been  but  slightly  affected  if  it  had 
been  separated  from  the  Scandinavian  countries,  while  such  a 
separation  would  have  entailed  ruin  on  them. 

526.  Denmark.  —  The  little  state  of  Denmark,  with  a  pop- 
ulation of  but  slightly  over  two  million,  had  taken  advantage 
of  modern  commercial  facilities  to  specialize  in  the  dairy  in- 
dustry, in  which  it  has  been  a  leader  and  teacher  of  Europe. 
When  we  add  to  butter  the  pork  products  raised  in  connection 
with  the  dairies,  and  the  eggs  from  Danish  poultry  yards,  we 
have  the  articles  which  made  up  more  than  two  thirds  of  the 
total  value  of  the  country's  exports. 


CENTRAL  AND  NORTHERN  MINOR  STATES    439 

627.  Norway;   Norwegian  shipping.  —  In  Norway,  also,  a 
country  so  barren  that  far  less  than  1  per  cent  of  its  area  is 
suited  to  cultivation  by  the  plough,  dairying  has  been  an  im- 
portant industry;  and  the  dairy  and  forest  industries  supplied 
most  of  the  exports.    The  difficulties  of  life  on  land  were  so 
great  that  the  people  were  forced  to  take  to  the  sea;    they 
gained  one  tenth  of  the  national  income  from  the  fisheries, 
and   had,   in   proportion   to   their   numbers,   more  merchant 
shipping  than  any  other   people.     In   1913  Norway  ranked 
second  in  tonnage  of  sailing  ships  (after  the  United  States), 
fourth  in  total  tonnage  (after  Germany),  and  fourth  in  tonnage 
of  steamers.     The  position  of  Norwegian  shipping  was  even 
higher  before  the  use  of  iron  ships  had  become  general,  and  when 
Norway  could  utilize  its  forest  products  in  shipbuilding.    Nor- 
way enjoyed  the  most  brilliant  period  of  its  shipping  in  the 
generation  following  1850,  when  it  took  the  place  of  the  United 
States  as  one  of  the  great  carrying  nations  of  the  world. 

628.  Sweden.  —  Sweden   was   somewhat   more   fortunate 
than  the  other  Scandinavian  countries  in  its  agricultural  re- 
sources, and  during  part  of  the  century  has  been  able  to  export 
a  surplus  of  grain.    It  has  been  recently,  like  the  others,  re- 
duced to  importing  the  cereals,  and  found  its  chief  strength 
in  products  of  the  forest,  the  pasture  and  the  mine.    From  its 
rich  iron  deposits  it  contributed  raw  materials  for  maintaining 
the  iron  industry  in  other  countries,  especially  England. 

QUESTIONS  AND  TOPICS 

A  profitable  exercise  on  each  of  the  minor  countries  treated  in  this 
and  in  the  following  chapters  is  a  study  of  the  statistics  of  present-day 
commerce,  and  a  reduction  of  these  statistics  to  the  form  of  a  graphic 
chart.  [Statesman's  Year-Book.] 

1.  Experience  of  the  chief  Dutch  colony  during  the  Napoleonic  wars. 
[Day,  Dutch  in  Java,  chap.  5.] 

2.  The  culture  system.     [Same,  chaps.  7,  8.] 

3.  Political   and   social   conditions   in   the   Netherlands.      [Hough, 
Dutch  life,  N.  Y.,  1901;    Campen  in  Westminster  Review,  1890,  134: 
479-492;   National  Review,  1890,  15:  748-763.] 


440  A  HISTORY  OF  COMMERCE 

4.  Recent  political  history  of  Belgium.    [Seignobos,  chap.  8.] 

5.  Recent  history  of  the  Swiss.     [Seignobos,  chap.  9.] 

6.  Labor  conditions  in  Switzerland.     [Scaife  in  Forum,   1901,  31: 
30-46.] 

7.  Conditions  in  Austria-Hungary  in  the  period  of    the  absolute 
monarchy.     [Seignobos,  chap.  13.] 

8.  Political  development  of  Austria-Hungary  in  the  last  half  of  the 
century.     [Same,  chap.  17.] 

9.  Austria-Hungary's    colonial    experiment.      (Bosnia-Herzegovina.) 
[Monthly  Review,  1902,  8:   72  ff.] 

10.  Recent  commercial  policy.     [Philippovich  in  Economic  Journal, 
1902,  12:    177-181.] 

11.  The  conflict  of  nationalities.     [Edinburgh  Review,   1898,   188; 
1-36;    Quarterly  Review,  1901,  194:    372-395,  with  map;    Coubertin  in 
Fortnightly  Review,  1901,  76:    605-614.] 

12.  Recent  history  of  the  Scandinavian  states.     [Seignobos,  chap. 
18.] 

13.  Danish   agriculture.     [Westenholz   in    Monthly   Review,    1904, 
14:   Feb.,  69-77;   Givskor  in  Economic  Rev.,  1902,  12:   410-419.] 

14.  Modern  Iceland.    [Quarterly  Review,  1894,  179:  58-82;   States- 
man's Year  Book.] 

15.  The  Danish  West  Indies.    [Waldemar  Westergaard,  The  Danish 
West  Indies,  1ST.  Y.,  1917.] 


BIBLIOGRAPHY 

The  narrative  history  of  the  minor  states  is  well  treated  in  Seignobos; 
present  conditions  are  described  in  volumes  of  the  series  Our  European 
Neighbors,  N.  Y.,  Putnam. 

On  Belgium,  see  Belgium,  its  institutions,  industries,  and  commerce, 
Brussels,  1904,  a  handbook  published  by  the  government  for  the  Louisiana 
Purchase  Exposition.  Similar  handbooks  have  been  published  for  the 
Scandinavian  peninsula;  they  include  much  historical  material  and  are 
valuable  sources  for  our  purposes.  See  Norway,  edited  by  Sten  Konow 
and  Karl  Fischer,  Kristiania,  1900;  Sweden,  its  people  and  its  industry, 
edited  by  Gustav  Sundbarg,  Stockholm,  1904.  Drachmann,  Industrial 
development  and  commercial  policies  of  the  three  Scandinavian  countries, 
published  for  the  Carnegie  Peace  Endowment  in  1915,  is  the  best  survey 
of  commercial  development,  but  is  not  an  easy  book  for  the  elementary 
student  to  use.  Kiaer  has  published  a  valuable  historical  sketch  of 
the  development  of  Scandinavian  shipping  in  Journal  of  Polit.  Econ., 
1891-2,  1:  329-364. 


CENTRAL  AND  NORTHERN  MINOR  STATES         441 

On  Switzerland  see  The  Swiss  Confederation,  by  Francis  O.  Adams 
and  C.  D.  Cunningham,  London,  1889,  and  W.  H.  Dawson,  Social  Switzer- 
land, London,  1897.  On  Austria-Hungary  see  S.  Whitman,  The  realm 
of  the  Habsburgs,  N.Y.,  Lovell  [1893],  and  the  volume  by  F.  H.  E.  Palmer 
in  the  series  of  Our  European  Neighbors,  N.  Y.,  Putnam. 


CHAPTER  XLIII 
STATES   OF   SOUTHERN   EUROPE 

529.  Condition  of  Italy  in  the  first  half  of  the  century.  — 

Of  the  countries  of  southern  Europe  none  has  gained  so  rapidly 
as  Italy  in  the  latter  part  of  the  nineteenth  century.  The 
explanation,  however,  must  be  sought  largely  in  the  fact  that 
none  was  sunk  so  low  as  Italy  in  the  first  part  of  the  century. 
Conditions  of  an  earlier  period,  described  in  the  previous 
chapter  on  Italy,  lasted  far  into  recent  times.  Here  is  the 
description  given  by  an  English  author,  writing  in  1878: 
"Before  1848,  Italy,  all  except  Piedmont,  seemed  hopelessly 
crushed.  Austria,  the  Pope,  and  the  Bourbons  held  her  in 
their  grasp.  Even  the  comparatively  native  sovereigns  of 
Tuscany  had  turned  oppressor,  and  all  Italy  groaned  like  a 
man  in  the  grasp  of  the  torturer.  Commerce  languished, 
divergent  fiscal  laws  and  arbitrary  raids  on  private  wealth 
choked  up  the  channels  of  intercourse  between  one  part  of  the 
kingdom  and  another;  without  shipping,  without  manufac- 
tures or  foreign  trade  of  a  solid  kind,  possessed  of  no  political 
security,  Italy  was,  thirty  years  ago,  more  insignificant  in 
the  eyes  of  neighboring  nations  than  Greece  or  Spain  is  now." 
In  southern  Italy  the  government  was  incompetent  to  perform 
the  first  of  its  public  duties,  the  protection  of  its  citizens.  It 
could  not  withstand  even  the  half-civilized  corsairs  of  Tripoli, 
who  pillaged  the  Neapolitan  ships,  and  finally,  long  after  the 
United  States  had  shown  the  proper  way  to  deal  with  such 
pirates,  bought  from  them  a  disgraceful  peace. 

530.  Lack  of  political  and  commercial  union.  —  The  penin- 
sula was  divided  among  seven  independent  states,  so  stratified 

442 


STATES  OF  SOUTHERN  EUROPE  443 

as  to  cut  the  natural  lines  of  trade,  and  to  prevent  effectually 
the  development  of  any  national  commercial  life.  Of  these 
states  six  had  the  protective  tariffs  characteristic  of  the  pro- 
hibitive period,  and  toll  stations  existed  even  inside  the  fron- 
tiers. A  Milan  manufacturer,  shipping  silks  to  Florence  (about 
1840),  had  to  pass  eight  customs  stations  in  150  miles;  a  mer- 
chant on  his  way  from  Bologna  to  Lucca  was  stopped  at  seven 
stations  in  the  stretch  of  about  125  miles.  Commerce  would 
have  been  in  desperate  straits  except  that  all  but  two  of  the 
states  touched  the  sea,  and  hence  could  find  some  opening  for 
trade.  It  is  noteworthy,  however,  that  the  leading  commercial 
city  of  Italy  in  this  period  was  one  which  many  people  now 
would  be  puzzled  to  place  on  the  map,  Leghorn.  It  owed  its 
commercial  importance,  not  to  the  advantages  of  situation  or 
to  the  productive  resources  of  surrounding  territory;  it  stood, 
about  1900,  sixth  in  the  list  of  Italian  ports,  and  had  but  a 
fraction  of  the  trade  going  to  Naples  or  Genoa.  It  gained  its 
prosperity  at  this  time  simply  by  "  the  comparative  security 
and  freedom"  which  foreigners  found  there,  and  which  they 
were  denied  in  other  parts  of  Italy. 

631.  Establishment  of  Italian  unity.  —  The  example  of 
Germany,  in  extricating  herself  from  a  somewhat  similar  situa- 
tion by  the  formation  of  customs  unions,  made,  naturally,  an 
impression  in  Italy,  and  led  in  1847  to  an  attempt  there  to 
form  a  similar  union.  The  attempt  was  paralyzed  by  the 
opposition  of  Austria,  who  saw  in  it  a  blow  aimed  at  her  political 
influence  in  the  peninsula.  The  Italian  states,  unlike  the 
German,  could  secure  commercial  union  only  as  a  result  of 
national  unity,  not  as  a  means  of  preparation  for  it.  National 
unity  was  in  preparation,  nevertheless,  in  the  brain  of  a  great 
statesman,  Cavour,  and  was  obtained  through  his  far-sighted 
plans  and  the  cooperation  of  the  king  whom  he  served,  Victor 
Emanuel,  ruler  of  Piedmont,  In  the  few  years  following  1859 
a  real  kingdom  of  Italy  was  established,  and  the  country, 
which  for  nearly  fifteen  hundred  years  had  formed  the  prey 
of  rival  powers,  became  at  last  a  power  herself,  worthy  to  rank 


444  A   HISTORY  OF  COMMERCE 

with  the  other  great  states  of  Europe.  The  old  barriers  to 
internal  trade  disappeared,  and  the  whole  country  accepted 
the  customs  tariff  of  Piedmont,  which  was  extremely  liberal. 
Rarely,  if  ever,  in  the  history  of  commerce,  have  changes  of 
such  sweeping  importance  taken  place  so  quickly.  The  tariff 
of  the  Kingdom  of  the  Two  Sicilies,  to  choose  an  extreme 
example,  which  levied  a  duty  of  over  $2,500  on  a  centner  of 
silk  goods,  gave  place  to  a  tariff  of  United  Italy,  in  which  the 
corresponding  duty  reached  a  minimum  of  $10. 

532.  Survey  of  Italian  commerce  since  1860.  —  The  effect 
on  commerce  of  this  great  political  upheaval  was  instantaneous. 
Contrasting  the  two  years,  1859  and  1861,  we  find  that  in  this 
brief  interval  the  value  of  imports  into  Italy  more  than  doubled. 
It  will  be  convenient  to  insert  here  figures  giving  the  total 
value  (exports  plus  imports)  of  the  special  trade  of  Italy,  at 
ten  year  intervals  from  1860  to  1910.  Reduced  to  dollars  and 
given  in  round  figures  of  millions  they  are  as  follows:  130, 
320,  440,  440,  590,  1,020.  The  reader  will  note  that  trade  grew 
at  a  rapid  rate  from  1860  to  1870,  and  more  slowly  to  1880. 
Then  came  a  stoppage;  in  some  years  there  was  an  actual 
decline,  and  the  value  of  exports  was  considerably  less  at  the 
end  of  the  decade  than  at  its  beginning.  There  was  a  recovery 
in  the  ten  years  closing  in  1900,  and  a  rapid  advance  there- 
after. The  figures  show,  however,  that  Italian  commerce 
advanced  but  slowly  in  the  latter  part  of  the  century,  and  a 
study  of  conditions  at  its  close  would  show  that  Italy  had  a 
commerce  then  far  from  commensurate  with  the  country's 
large  population.  The  average  share  of  each  Italian  in  the 
annual  movement  of  commerce  was  much  less  than  that  falling 
to  the  inhabitants  of  most  of  the  other  states  of  Europe.  Among 
the  great  states  only  Spain  and  Russia  ranked  lower,  in  this 
respect. 

This  survey  suggests  the  topics  which  demand  discussion 
in  the  following  sections.  We  must  know  the  reasons  for  the 
rapid  development  of  Italian  commerce  till  about  1880,  and 
for  the  check  to  progress  after  that  date;  we  want  an  explana- 


STATES  OF  SOUTHERN  EUROPE  445 

tion   of  the   comparatively   slight  share   which   the   average 
Italian  has  had  in  the  world's  commerce. 

533.  Development  of  agriculture  and  commerce  after  1860. 

—  When  Italy  secured  national  unity,  about  1860,  the  country 
was    almost    purely    agricultural.      The    ordinary    trades,    of 
course,  were  exercised  to  satisfy  local  needs,  and  the  silk  manu- 
facture had  not  altogether  perished,  but,  to  use  the  phrase  of 
a  modern  writer,  though  there  were  industries  in  Italy  there 
was  no  Italian  industry.     Restrictive  taxes  and  tariffs  had 
prevented  the  development  of  any  considerable  manufacture. 
When,   therefore,   comparative  freedom  of  trade  was  intro- 
duced, the  people  made  full  use  of  the  opportunity  to  purchase 
the  cheap  wares  of  the  factory  industry  of  other  countries; 
they  imported  manufactures  in  increasing  amount,  and  paid 
for  them  by   exporting   their  surplus  agricultural  products. 
The  railroad  system,  which  grew  from  800  to  5,000  miles  in 
the  period  1860-1880,  gave  greatly  improved  facilities  for  the 
marketing  of  wares,  and  affected  distinctly  the  course  of  foreign 
trade;   the  proportion  of  commerce  carried  on  across  the  land 
frontier  rose  in  this  period  from  a  third  to  nearly  a  half  of  the 
total. 

534.  Increase  of  customs  duties;    protection;    tariff  war. 

—  The  Italians  realized  at  once  the  benefits  of  the  movement 
which  led  to  national  unity,  but  ever  since  they  have  been 
carrying  its  burdens.     The  expense  of  the  national  movement 
was  enormous,  especially  in  view  of  the  poverty  of  the  country; 
it  weighted  the  government  with  debt,  and  required  a  con- 
stant increase  in  taxes.     The  treasury,  reaching  out  in  every 
direction  for  money,  and  forced  to  some  fiscal  devices  which 
seem  now  positively  iniquitous,  did  not  spare  commerce.    Duties 
were  raised  from  time  to  time,  and  a  general  revision  of  the 
tariff  in  1878,  while  it  reformed  some  old  abuses,  tended  still 
to  raise  the  general  level  of  duties,  and  introduced  a  distinct 
element  of  protection.     The  revised  tariff,  however,  did  not 
go  far  enough  to  satisfy  the  demands  either  of  the  treasury  or 
of  the  protectionists,  and  was  altered  again  in  1887.     Com- 


446  A  HISTORY  OF  COMMERCE 

merce  labored  henceforth  under  high  revenue  duties,  under 
increased  duties  designed  to  protect  Italian  manufactures,  and, 
furthermore,  under  new  or  increased  duties  on  agricultural 
products. 

One  disastrous  result  of  the  new  tariff  appeared  quickly  in 
the  outbreak  of  a  tariff  war  between  Italy  and  France.  France 
had  been  Italy's  best  customer,  taking  at  one  time  nearly 
half  of  her  total  exports  and  furnishing  about  a  quarter  of  her 
imports.  Trouble  between  the  two  countries  had,  however, 
been  brewing  for  years;  they  were  following  different  lines  in 
foreign  politics,  and  the  protectionists  on  both  sides  of  the 
frontier  viewed  with  jealousy  a  commerce  which  stimulated 
the  development  of  international  rather  than  national  indus- 
tries. The  tariff  of  1887  called  forth  a  reply  in  kind  from 
France;  this  was  met  by  a  rejoinder  from  Italy; .  and  so  the 
duties  grew  rapidly  on  either  side,  and  had  soon  reduced  the 
commerce  between  the  countries  to  a  small  part  of  its  former 
dimensions.  The  most  important  export  industries  of  Italy 
(wine,  raw  silk,  fruits,  live  stock,  eggs)  suffered  severely,  and 
many  producers  were  absolutely  ruined. 

535.  Italian  agriculture;  poverty  of  the  people.  —  The 
course  of  tariff  policy  explains,  in  large  part,  the  check  which 
Italian  commerce  had  experienced  in  the  last  decades  of  the 
century.  Reasons  why  this  commerce  was  so  small  in  pro- 
portion to  the  population  will  appear  as  we  review  now  some 
features  of  the  Italian  productive  organization. 

Few  of  the  large  states  of  Europe  showed  so  large  a  pro- 
portion of  the  people  engaged  in  agriculture,  so  small  a  propor- 
tion in  manufactures,  as  were  found  in  modern  Italy.  Con- 
siderably more  than  half  the  people  lived  directly  from  the  land. 
Not  only  did  Italy  show  backwardness  in  this  respect;  the 
character  of  Italian  agriculture  was  itself  backward.  The  land 
was  worked  largely  "on  shares,"  a  system  which  does  not  en- 
courage improvement  or  stimulate  efficiency.  A  government 
commission  reported  in  1881  that  production  depended  almost 
entirely  on  mere  labor,  and  that  capital  and  intelligence  con- 


STATES  OF  SOUTHERN  EUROPE  447 

tributed  only  a  minimum.  Antiquated  implements  and  waste- 
ful and  careless  methods  of  treating  the  crop,  went  far  to  nullify 
the  natural  advantages  of  soil  and  climate.  When  we  consider 
that,  of  the  small  surplus  which  the  agriculturist  obtained, 
the  government  demanded  a  good  share  for  taxes,  we  can 
understand  why  the  mass  of  the  people  were  wretchedly  poor, 
and  must  content  themselves  with  a  bare  living.  It  is  worth 
noting  that  about  1900  the  consumption  of  sugar  in  Italy 
was  only  about  six  pounds  per  head,  less,  even,  than  in  Turkey, 
while  in  most  European  countries  people  consumed  from  20 
to  50  pounds  or  even  more.  Salt  itself  was  a  luxury,  which 
was  heavily  taxed.  The  protective  tariff  appeared  to  extend 
favors  to  farmers  as  well  as  to  manufacturers,  but  the  people 
who  gained  by  it  were  chiefly  the  great  landlords,  while  the 
mass  of  the  people  simply  paid  more  for  bread  because  of  it. 

536.  Manufactures.  —  As  agriculture  was  the  strongest 
branch  of  production  in  Italy,  it  was  bound  to  suffer  more 
than  any  other  from  the  protective  tariff.  Italian  agricul- 
turists did  not  need  protection  for  most  of  their  products, 
and  they  did  need  the  chance  to  market  their  products  in  free 
exchangte  for  industrial  wares  imported  from  abroad.  We  have 
now  to  see  what  success  the  Italian  tariff  had  in  building  up 
the  native  industry  on  which  the  people  were  forced,  in  large 
part,  to  rely. 

Italian  manufactures,  in  1880,  had  scarcely  advanced  be- 
yond the  meager  beginnings  which  we  found  in  1860.  Nearly 
all  conditions  were  adverse.  Capital  was  scanty.  Of  impor- 
tant raw  materials  the  country  lacked  all  but  silk  and  hemp. 
Coal,  the  mainstay  of  modern  manufacturing,  had  to  be  im- 
ported at  an  expense  which  nearly  doubled  its  price.  Most 
serious,  perhaps,  of  all  difficulties  was  the  lack  of  a  class  of 
industrial  leaders,  men  of  technical  knowledge  and  business 
energy.  We  may  take  as  typical  the  case  of  a  macaroni  manu- 
facturer in  Naples,  who  declined  some  important  foreign 
orders,  for  no  other  reason  than  that  he  had,  as  it  was,  enough 
business  to  make  both  ends  meet,  and  saw  no  reason  for  adding 


448  A  HISTORY  OF  COMMERCE 

a  new  worry  to  life.  The  single  important  advantage  which 
Italian  manufacturers  enjoyed  was  that  of  cheap  labor.  The 
government  was  lax  in  its  factory  legislation,  and  allowed 
employers  to  secure  their  labor  supply  from  women  and  children, 
at  an  extremely  low  rate. 

The  great  development,  therefore,  which  Italian  manu- 
facturers have  shown  in  the  last  decades  of  the  century  has 
been  due  not  to  any  natural  fitness  of  the  country,  but  solely 
to  the  tariff,  which  has  raised  prices  paid  by  consumers  enough 
to  counterbalance  natural  disadvantages,  and  to  attract  men 
into  manufacturing  industry.  The  artificial  character  of  Italian 
manufactures  is  shown  strikingly  by  the  fact  that  at  the  very 
close  of  the  century  not  one  of  the  protected  manufactures 
was  strong  enough  to  contribute  in  any  considerable  degree  to 
the  exports  of  the  country. 

537.  Shipping;  colonies.  —  Some  of  the  most  unfortunate 
features  of  Italian  policy  seem  to  have  been  the  result  of 
national  vanity,  of  the  desire  on  the  part  of  Italians,  now  that 
they  had  made  for  themselves  a  great  state,  to  make  their 
state  resemble  the  other  great  powers  in  all  respects.  This 
feeling  was  certainly  responsible  in  part  for  their  determina- 
tion to  build  up  a  system  of  national  manufactures,  regardless 
of  expense.  It  led  them  to  profuse  expenditures  for  the  en- 
couragement of  shipping,  which  resulted,  indeed,  in  a  growth 
of  the  merchant  marine,  but  created  in  it  merely  a  costly 
luxury.  The  Italian  navigation  companies  charged  high  freight 
rates,  and  included  in  their  fleets  many  antiquated  vessels. 

The  instinct  of  imitation,  finally,  led  the  Italians  to  follow 
the  lead  of  other  powers  in  colonial  expansion.  They  did  not 
escape  the  colonial  fever  prevalent  in  the  eighties,  and  spent 
money  and  lives  lavishly,  in  the  attempt  to  build  up  a  dominion 
on  the  African  side  of  the  Red  Sea.  Their  attempt  ended  in 
disastrous  failure  (Adowa,  1896),  and  popular  opposition  to 
such  enterprises  grew  so  strong  that  the  government  did  not 
dare  to  carry  out  a  later  project  for  the  establishment  of  an 
Italian  station  on  the  coast  of  China  (San  Mun,  1899). 


STATES  OF  SOUTHERN  EUROPE  449 

638.  Recent  progress  of  Italy.  —  The  preceding  sections 
have  been  avowedly  critical  in  tone,  and  are  designed  to  make 
clear  the  great  gap  which  separates  Italy  from  the  leaders  in 
the  world's  industry  and  commerce.    It  is  important,  however, 
that  the  reader  should  distinguish  Italy,  on  the  other  side,  from 
such  backward  countries  as  Spain  and  Portugal.    Though  Italy 
was  poor  it  was  not  so  poor  as  they,  and  it  offered  vastly  richer 
promises  for  the  future.     In  the  closing  years  of  the  century 
it  showed  marked  advances  in  many  lines.     Italian  agricul- 
turists awakened  to  the  possibilities  of  their  profession;    they 
showed  an  eagerness  to  improve  their  methods,  and  by  various 
forms  of  association  and  cooperation  they  scored  great  advances. 
The  exports  of  dairy  and  poultry  products  doubled  in  about 
ten  years,  and  became  more  important  than  the  export  of  wine. 
Italian  manufacturers  secured  now  from  natives  the  technical 
assistance  for  which  they  formerly  depended  entirely  on  for- 
eigners.    They  emancipated  themselves,  in  part,  from  coal, 
by  their  skilful  management  of  water  power,  and  have  come 
to  enjoy  a  high  reputation  for  electrical  appliances  for  the  trans- 
mission of  power  and  other  purposes.    The  tariff  has  been  made 
more  liberal  by  treaties  with  other  states  and  by  a  reconcili- 
ation with  France;    and  commerce  in  the  period  before  1914 
gave  evidence  of  the  capacity  for  healthy  growth. 

639.  Spain.  —  Spain,  with  an  area  much  larger  than  that 
of  Italy,  and  with  a  population  more  than  half  as  large,  had 
in  1912  a  commerce  less  than  half  that  of  the  Italian.  The  fault 
lay  not  with  the  country,  which  in  mineral  resources  is  perhaps 
the  richest  in  Europe,  and  which  under  the  skilful  agriculture 
of  the  Moors  was  made  to  bloom  like  a  garden,  but  with  the 
people  who  have  neglected  or  misused  their  opportunities. 
Spain  furnishes  a  striking  example  of  the  evil  that  bad  politics 
can  work  in  economic  development.    The  personal  absolutism 
of  the  period  before  1800  has  been  shaken  off  in  the  nineteenth 
century,  but  experiments  in  constitutional  government  under 
monarchs  of  various  families  and  even  under  a  republic,  have 
not  succeeded  in  bettering  conditions  greatly.     The  mass  of 


450  A  HISTORY  OF  COMMERCE 

the  people  remained  ignorant,  and  most  of  their  leaders  were 
inefficient  and  corrupt.  There  can  be  no  wholesome  economic 
life  under  these  conditions.  Shrewd  politicians  used  economic 
enterprises  merely  as  a  means  to  draw  money  from  the  public 
treasury  or  from  the  pockets  of  consumers,  while  the  investor 
or  worker  without  political  influence  was  deterred  from  enter- 
prise by  the  heavy  taxes  which  were  heaped  upon  him. 

540.  Spanish  commerce  in  the  first  half  of  the  century.  — 
A  partial  reform  of  the  Spanish  colonial  system  toward  the 
close  of  the  eighteenth  century  led  to  a  growth  of  trade  with 
the  colonies,  so  that  it  formed,  if  the  figures  can  be  trusted, 
a  considerable  part  of  the  total  Spanish  commerce,  which  was 
small  at  best.    The  promise  of  commercial  development  inside 
the  Spanish  Empire  was  of  short  duration.    While  Spain  was 
still  harassed  by  the  Napoleonic  wars,  revolutions  began  among 
the  Spanish  colonies  on  the  American  continent;   and  as  soon 
as  they  had  achieved  their  independence  they  used  it  to  trade 
with  states  like  England  rather  than  with  the  country  which 
had  asked  so  much  of  them  and  could  offer  them  so  little. 
The  commerce  of  Spain  with  other  countries  was  hampered  by 
the  Spanish  commercial  policy,  which  an  Englishman  of  the 
time  called  "one  of  the  most  pernicious  and  restrictive  of  all 
the  systems  of  trading  exclusion."     Duties  were  levied  both 
on  imports  and  on  exports,  and  included  not  only  rates  of 
50  to  100  per  cent  but  also  many  absolute  prohibitions.    Span- 
ish commerce  would  have  been  starved  out  of  existence  if 
the  government  which  set  these  rules  had  not,  by  its  ineffi- 
ciency and  corruption,  furnished  the  means  of  evading  them. 
A  veritable  army,  including,  it  is  said,  300,000  persons,  of 
whom  one  third  were  armed,  found  its  chief  occupation  in 
smuggling;    Spanish  manufacturers  maintained  factories  only 
to  mask  the  sale  of  contraband  goods,  and  even  members  of 
the  government  engaged  in  the  contraband  trade. 

541.  Recent  commerce  of  Spain.  —  The  turning-point  in 
the  recent  history  of  Spanish  commerce  came  about  the  middle 
of  the  century,  when  the  worst  abuses  of  the  old  tariff  were 


STATES  OF  SOUTHERN  EUROPE  451 

shorn  off.  The  reform  was  followed  by  a  rapid  increase  in  the 
country's  trade,  which  grew  to  more  than  fourfold  in  the  forty 
years  following.  Especially  noteworthy  was  the  increase  in  this 
period  of  the  importation  of  the  implements  and  raw  materials 
of  industry  (coal,  machinery,  textile  fibers,  etc.),  showing  that 
Spain  was  at  last  beginning  to  seek  a  place  for  herself  among 
modern  commercial  nations.  Such  indications  of  progress 
must  not,  however,  blind  our  eyes  to  the  fact  that  it  was 
attained  by  a  colonial  and  commercial  policy  which  retained 
many  of  the  old  restrictive  features.  The  loss  of  the  remaining 
important  colonies  to  the  United  States  in  the  war  of  1898  was 
a  severe  blow  to  Spanish  industries,  and  they  have  been  sup- 
ported since  then  by  a  protective  tariff  which  bore  heavily 
on  many  producers  as  well  as  on  all  the  consumers  in  Spain.  The 
considerable  development  in  mining  (iron,  copper,  quicksilver, 
etc.)  has  been  due  to  foreign  energy  and  capital,  and  the  native 
Spaniards  offered  as  exports  to  other  countries  little  more  than 
dessert  for  their  dinner  tables:  wine,  fruit,  nuts,  and  raisins. 
It  is  noteworthy  and  significant  that  Spain  suffered  seriously 
from  the  competition  of  California  in  the  sale  of  fruit  in  Europe; 
this  most  perishable  of  wares,  in  which  a  nearby  country  ought 
to  control  the  market  without  effort,  was  packed  and  trans- 
ported in  such  a  slovenly  fashion  by  the  Spaniards  that  a 
people  6,000  miles  distant  could  excel  them  in  the  quality  they 
offered  to  the  consumer  in  Paris  or  London.  In  the  period 
from  1890  to  1910  the  figures  showing  the  value  of  Spanish 
commerce  remained  almost  stationary. 

542.  Portugal.  —  In  all  the  respects  which  concern  a  stu- 
dent of  recent  commerce  Portugal  is  but  a  miniature  of  Spain, 
with  the  faults  of  Spain  exaggerated  rather  than  lessened  by 
the  weakness  and  smaller  size  of  the  country.  "It  is  scarcely 
credible,  but  it  is  nevertheless  a  fact,  that  agriculture  is  nearly 
in  the  same  condition  as  it  was  some  hundreds  of  years  since"; 
these  words  of  an  English  author  would  apply  now  nearly  as 
well  as  when  they  were  written  in  1843.  Few  of  the  inhabit- 
ants were  engaged  in  occupations  other  than  agriculture;  rich 


452  A  HISTORY  OF  COMMERCE 

mines  remained  unworked,  and  manufacturing  has  remained 
insignificant  throughout  the  century.  After  1850  it  could  still 
be  said  of  the  Portuguese  that  "their  entire  faith  is  reposed  in 
protectionism,  monopolies,  restrictions,  and  high  duties." 
Portuguese  trade,  nearly  ruined  already,  received  a  further 
blow  by  the  separation  of  Brazil  about  1820;  and  though  con- 
siderable colonial  possessions  in  Africa  and  the  East  were 
retained,  the  Portuguese  have  shown  no  capacity  to  base  on 
them  commerce  of  any  importance.  By  exports,  of  which 
wine  and  cork  were  the  most  important,  the  Portuguese  were 
able  to  satisfy  their  most  pressing  necessities;  but  the  back- 
wardness of  commerce  can  be  seen  when  it  is  realized  that  the 
trade  of  this  country,  approximately  equal  in  population  to 
the  Netherlands,  was  in  1911  less  than  one  twentieth  of  Dutch 
trade. 

QUESTIONS  AND  TOPICS 

1.  Social  and  economic  conditions  in  Italy  after  1800.    [King,  Hist., 
vol.  1,  chaps.  3-5.] 

2.  Formation  of  United  Italy.    [Seignobos,  chap.  11,  middle  part.] 

3.  Commerce  of  Italy  about  1850.    [Romans,  Cyclopedia,  p.  1114  ff.] 

4.  Burden  of  debt  and  taxes.     [King  and  Okey,  p.  270  ff.,  chap. 
15;  Villari,  chap.  4;  W.  Calkins,  Taxation  and  business  in  Italy,  Forum, 
1902,  33:   333-345.] 

5.  Italian  agriculture.    [King  and  Okey,  chap.  8;  Villari,  chap.  11.] 

6.  Life  of  the  agricultural  classes.    [Phillipps,  Peasants  of  Romagna, 
Fortnightly  Review,  1897,  68:  407-417.] 

7.  Poverty  of  the  people.     [King  and  Okey,  chap.  6;   Villari,  chap. 
4;   Strutt,  Monthly  Review,  1901,  4:   August,  62  ff.] 

8.  Emigration.     [King  and  Okey,  chap.  17;   Schuyler,  Italian  immi- 
gration into  the  United  States,  Polit.  Science  Quarterly,  1889,  4:   480- 
495.] 

9.  Italian  manufactures.    [King  and  Okey,  chap.  7:  Villari,  chap.  12.] 

10.  The  Italian  colonial  venture.    [Edwards  in  Westminister  Review, 
1897,  148:    477-489;    Keller,  517-531.] 

11.  Recent   commerce   of   Italy.      [Statesman's   Year-Book;    treat 
exports,  imports,  countries  traded  with,  etc.,  as  has  been  already  sug- 
gested.] 

12.  Commerce  of  Italy  with  the  United  States.    [Luzzatti,  in  North 
Amer.  Review,  1903,  177:  247-259.] 


STATES  OF  SOUTHERN  EUROPE  453 

13.  Recent  development  of  agriculture.     [King  and  Okey,  chap.  9.J 

14.  Political  conditions  in  Spain.    [Dillon  in  Contemporary  Review, 
1898,  73:  876-907,  74:  305-334;  Foreman  in  National  Review,  1897,  29: 
721-734,  30:   547-560.] 

15.  Commerce  of  Spain  about  1850.    [Homans,  Cyclopedia,  p.  1739  ff .] 

16.  The  recent  commerce  of  Spain.     [Statesman's  Year-Book.] 

17.  Resources  and  industries  of  Spain.    [E.  D.  Jones  in  North  Amer. 
Review,  1898,  167:   39-47.] 

18.  Recent  commerce  of  Portugal.     [Statesman's  Year-Book;    see 
Homans,  Cyclopedia,  for  conditions  about  1850.] 

BIBLIOGRAPHY 

For  the  general  history  of  Italy,  see  besides  Seignobos,  Bolton  King, 
History  of  Italian  unity,  N.  Y.,  Scribner,  1899,  2  vols.,  with  bibliography. 
The  book  by  the  same  author  in  collaboration  with  Thomas  Okey,  **  Italy 
to-day,  London  (N.  Y.,  Scribner),  1901,  is  excellent  for  recent  conditions, 
and  has  a  full  classified  bibliography.  Villari,  *  Italian  life,  N.  Y.,  Putnam, 
1902,  is  more  popular  and  depends  in  part  on  King  and  Okey,  but  still 
is  good.  Orsi's  book  in  Story  of  the  Nations  Series  is  mainly  political. 

On  Spain  good  reading  in  English  is  as  scarce  as  on  Italy  it  is  plenti- 
ful. Seignobos  is  dull,  and  Hume's  histories  are  almost  entirely  political. 
There  is,  however,  a  good  book  in  the  series  of  British  Colonies  and  Foreign 
Countries,  W.  Webster,  *  Spain,  London,  1882;  and  Higgin,  Spanish  life, 
N.  Y.,  Putnam,  1902,  has  some  material  of  value.  The  U.  S.  Monthly 
Summary,  Commerce  and  Finance,  published  several  reviews  of  Spanish 
commerce  at  the  time  of  the  Spanish  war  (March,  June,  1898,  April,  1899), 
and  a  considerable  amount  of  material  on  various  aspects  of  Spain  appeared 
about  that  time  in  the  periodicals. 

The  close  commercial  relations  between  Portugal  and  England  have 
given  rise  to  two  excellent  books  on  the  condition  of  Portugal  in  the 
nineteenth  century,  J.  J.  Forrester,  *  Portugal  and  its  capabilities,  third 
ed.,  London,  1856;  Oswald  Crawford,  *  Portugal,  old  and  new,  London, 
1880. 


CHAPTER  XLIV 
EASTERN  EUROPE 

543.  Great  size  and  small  commerce  of  the  Russian  Empire 
—  The  attention  and  imagination  of  men  have  long  been 
impressed  by  the  size  of  the  Russian  empire,  which  included 
an  area  greater  than  that  presented  by  the  moon  at  the  full. 
Combining  the  characteristics  both  of  Europe  and  of  Asia, 
Russia  was  almost  a  world  in  herself,  and,  indeed,  was  called  by 
one  of  her  rulers  "a  sixth  part  of  the  world,"  worthy  to  rank 
as  a  continent.    Yet  this  great  state  took  a  place  in  modern 
commerce  below  petty  countries  like  the  Netherlands  and 
Belgium.    A  country  of  such  vast  size  might,  of  course,  secure 
by   internal   trade   many   of  the   advantages   which   smaller 
countries  must  seek  in  international  exchange.     The  United 
States  presents  an  example  of  a  territory  so  large  and  so  richly 
endowed  that  it  can  afford,  in  considerable  degree,  to  renounce 
commerce  with  the  rest  of  the  world,  and  can  still  maintain 
from  its  own  resources  a  high  industrial  civilization.     Russia 
has  not  enjoyed  a  similar  success.     It  had  a  comparatively 
sluggish  internal  trade;    and  it  lacked  industrial  civilization. 
We  must  seek  in  the  history  of  commerce  an  explanation  of 
these  facts. 

544.  Historical  reasons  for  backward  development.  —  The 
few  paragraphs  devoted  to  Russia  in  a  previous  chapter  sug- 
gested the  main  reason  for  the  country's  backwardness.    Dur- 
ing many  centuries,  while  the  peoples  of  the  West  were  advanc- 
ing in  civilization,  the  people  of  Russia  were  facing  away  from 
Europe,    occupied   in   defending   themselves    against   Asiatic 
princes.     Russia  shared  in  none  of  the  great  movements  of 
early  European  history:    feudalism,  chivalry,   crusades,  rise 

454 


EASTERN  EUROPE  455 

of  towns,  Reformation,  Renaissance.  It  was  devoted  entirely 
to  the  struggle  for  self-preservation.  When  it  became  part  of 
the  European  world,  therefore,  about  1700,  it  brought  with  it 
into  modern  times  many  characteristics  of  an  unformed,  half- 
developed  organization;  and  since  that  date  it  has  been  trying, 
and  it  is  now  still  trying,  to  catch  up  with  the  rest  of  Europe. 

545.  Russian    commerce    about    1800.  —  The    movement 
toward  progress,   initiated  by  Peter  the  Great   about   1700, 
continued,  with  various  fluctuations,  during  the  century.     In 
so  far  as  it  found  expression  in  commerce  we  can  regard  the 
last  fifty  years  before  1800  as  a  time  of  rapid  advance;    com- 
merce grew  to  nine  fold  the  volume  which  it  showed  in  1750. 
So  slight,  however,  had  been  the  beginnings  of  Russian  trade, 
that  it  amounted  in  1802  only  to  about  fifty  million  dollars. 

Russia  was  still  practically  in  the  position  which  it  had 
occupied  in  the  time  of  the  Hansa,  dependent  on  the  West 
for  all  its  finer  manufactures,  and  supplying  raw  materials  in 
exchange.  Hemp  and  flax,  crops  which  rapidly  exhaust  the 
soil,  and  for  the  cultivation  of  which  the  great  tracts  of  fresh 
land  in  Russia  offered  an  advantage,  were  the  chief  exports, 
Among  others  on  the  list  were  wood,  grain,  tallow,  hides,  furs, 
feathers,  etc.  The  Russian  nobles  exported  a  certain  amount 
of  linen,  which  they  forced  their  serfs  to  make  for  them  that 
they  might  have  the  means  of  purchasing  foreign  luxuries,  and 
manufactured  also  iron  for  sale  abroad.  The  appearance  among 
the  exports  of  this  metal,  which  we  are  used  to  associate  with 
advanced  industrial  countries,  is  explained  by  the  fact  that 
charcoal  was  still  an  important  source  of  fuel  for  the  iron 
manufacture,  and  of  this  the  boundless  Russian  forests  offered 
an  abundant  supply. 

546.  Means  of  transportation.  —  Almost  nothing  had  been 
done  as  yet  to  unite  by  means  of  transportation  the  vast 
stretches  of  territory  in  Russia.    Roads  were  practically  non- 
existent, and  goods  were  transported  by  land  only  in  winter, 
when  they  could  be  sledged  over  the  rough  ground  on  the 
snow.    The  water-ways,  with  which  the  country  is  so  abun- 


456  A  HISTORY  OF  COMMERCE 

dantly  provided,  had  been  connected  by  a  few  important  canals, 
and  were  the  chief  means  of  transportation.  Goods  were 
brought  to  them  on  sledges  in  winter,  to  await  the  high  water 
of  the  spring  freshets.  They  were  laden  on  flat-boats,  holding 
sometimes  several  hundred  tons,  but  built  to  draw  only  two  or 
three  feet  of  water,  and  were  floated  down  with  the  current 
when  the  ice  melted.  The  boats  were  rudely  constructed,  and 
were  broken  up  for  timber  or  fire- wood  at  the  end  of  the  trip. 
The  inconvenience  and  uncertainty  of  such  a  system  of  trans- 
portation are  obvious,  but  it  was,  nevertheless,  remarkably 
cheap;  rates  on  some  water  routes  were  only  one  or  two  cents 
per  ton-mile. 

547.  Chief  ports.  —  The  conditions  of  transportation  con- 
fined almost  all  the  foreign  trade  of  Russia  to  the  sea,  and 
the  commerce  across  the  western  frontier  was  insignificant. 
Archangel,  situated  on  the  river  Dwina,  a  few  miles  from  the 
coast  of  the  White  Sea,  and  the  leading  port  of  Russia  before 
the  time  of  Peter  the  Great,  still  retained  a  respectable  share 
of  commerce,  and  was  visited  every  year  by  ships  from  England 
and  the  Netherlands.    In  relative  importance,  however,  it  had 
declined  greatly  after  the  foundation  of  St.  Petersburg,  which 
soon  became  the  most   important   outlet  for  the   country's 
trade.    A  rival  was  at  this  time,  however,  growing  up  in  the 
South,  where  Russia  had  only  recently  secured  the  territory 
on  the  shore  of  the  Black  Sea.    Odessa,  which  was  founded  in 
1793,  rose  rapidly  in  commercial  importance,  especially  during 
the  Napoleonic  wars,  when  the  Baltic  trade  suffered  a  severe 
check. 

548.  Development  up  to  the  Crimean  War  (1854r-1856).  — 
During  the  first  half  of  the  nineteenth  century  Russian  com- 
merce grew  steadily  but  slowly;  the  rate  of  increase  was  much 
behind  that  of  the  preceding  fifty  years.    A  partial  explanation 
of  this  check  to  progress  can  be  found  in  the  adoption,  in  1822, 
of  a  prohibitive  tariff;  the  importation  of  many  foreign  manu- 
factures (clocks,  textiles,  porcelain,  glassware,  etc.),  was  abso- 
lutely forbidden.     Shortly  after  the  middle  of  the  century, 


EASTERN  EUROPE  457 

however,  came  a  turning-point.  The  Crimean  War,  in  which 
England  and  other  states  were  engaged  with  Russia,  is  gen- 
erally admitted  to  have  yielded  to  neither  of  the  chief  com- 
batants advantages  proportional  to  the  costs  which  it  in- 
volved. It  was  in  one  way, .  however,  of  immense  benefit  to 
Russia.  It  awakened  the  country  to  a  realization  of  its  back- 
wardness. It  raised  a  demand  for  reform  of  antiquated  condi- 
tions in  economic  and  political  life,  which  the  Czar  himself 
was  the  first  to  heed. 

549.  Reforms ;    growth  of  the  railroad  system.  —  The  re- 
form movement  bore  fruit  in  many  lines  to  which  we  can  pay 
but  scant  attention.    It  led  to  the  emancipation  of  the  serfs  in 
1861,  by  which  a  considerable  part  of  the  Russian  people  were 
liberated  from  a  condition  resembling  medieval  bondage,  and 
became  free  land-holders.     It  secured  at  least  a  partial  im- 
provement in  the  system  of  government.     It  was,  finally,  to 
name  the  result  of  the  greatest  influence  on  commerce,  the 
occasion  for  the  introduction  of  the  modern  railroad  system  in 
Russia.     The  government  had  found  itself  so  hampered  in 
carrying  on  the  war  by  the  lack  of  transportation  facilities, 
that  it  now  bent  every  energy  to  remedying  the  defects.    The 
railroads  of  Russia  measured  at  the  outbreak  of  the  war  only 
about  600  miles.     In  the  ten  years  following  the  railroad 
system  grew  to  over  2,000  miles,  and  in  the  next  decade  to 
about  10,000.     Though  the  first  lines  were  built  mainly  to 
serve  military  purposes,  those  constructed  later  were  designed 
to  develop  the  economic  resources  of  the  country;    and  it  is 
hard  to  overestimate  the  importance  of  this  development  of 
the  means  of  modern  transportation,  to  a  country  which  stood 
in  such  sore  need  of  it  as  Russia. 

550.  Development  of  commerce.  —  The  results  of  the  re- 
forms can  be  followed  in  the  growth  of  Russian  commerce 
after  the  middle  of  the  century.    In  the  decade  1860-1870  the 
foreign  commerce  of  the  country  increased  to  more  than  double 
what  it  had  been,  and  was  growing  at  this  time  faster  than 
the  commerce  of  any  other  country  in  Europe,  except  that 


458  A   HISTORY  OF  COMMERCE 

of  a  neighboring  state,  Austria-Hungary.  Some  significant 
changes,  moreover,  appeared  in  the  direction  and  character 
of  Russian  trade.  The  great  gains  of  the  period  were  made 
by  southern  Russia,  where  the  wheat  fields  of  the  rich  "black- 
<jarth"  district  were  brought  within  reach  of  a  market.  It 
was  about  this  time  that  wheat  won  the  first  place  among  the 
exports  away  from  flax  and  its  products.  Commerce  by  way 
of  the  Black  Sea  increased  very  rapidly,  while  the  Baltic  did 
not  keep  its  proportional  share  in  the  commerce  of  the  country, 
and  the  proportion  of  trade  finding  its  outlet  by  the  Arctic 
Ocean  had  sunk  to  insignificance.  Commerce  with  the  west 
of  Europe  across  the  land  frontier,  which  formerly  had  been 
restricted  by  the  difficulty  of  transportation,  grew  even  faster 
than  the  Black  Sea  commerce,  and  gave  an  entirely  new  im- 
portance to  trade  relations  with  neighboring  states.  Eng- 
land had  enjoyed  the  largest  share  of  Russia's  commerce  during 
the  first  part  of  the  century,  but  could  not  hold  her  own  hence- 
forth in  competition  with  Germany.  This  last-named  country, 
then  in  course  of  rapid  industrial  development,  was  enabled 
by  the  railroads  to  win  her  way  rapidly  in  Russian  commerce, 
and  soon  was  the  largest  sharer  in  it. 

551.  Character  of  industries  and  commerce.  —  Russia,  like 
many  other  of  the  European  states,  enjoyed  the  greatest 
freedom  of  trade  in  the  period  following  closely  after  the 
middle  of  the  century.  The  customs  duties  levied  in  Russia 
at  this  time  would  have  been  considered  high  in  western 
Europe,  but  they  were  much  lower  than  the  rates  ruling  in 
the  first  half  of  the  century,  and  much  lower  than  the  rates 
in  force  at  the  century's  close. 

Russia  at  this  time  was  still  almost  exclusively  agricultural. 
The  serfs  had  learned  to  supply  their  simple  needs  for  clothing 
and  implements  by  domestic  industries,  but  nothing  like  the 
western  factory  organization,  with  its  extensive  use  of  power 
machinery,  had  as  yet  appeared.  Attempts  to  stimulate  such 
an  organization,  by  privileges  and  protection,  had  resulted  in 
failure.  The  Russians  are  not  a  people  with  a  gift  for  mech- 


EASTERN  EUROPE  459 

anism.  It  has  been  said  of  them  that  their  only  invention  is 
the  samovar,  their  apparatus  for  making  tea.  The  world 
exposition  of  1867  displayed  samples  of  Russian  industry,  but 
most  of  these  were  the  products  of  village  craftsmen,  and  the 
few  samples  of  modern  manufacture  came  from  factories 
owned  for  the  most  part  by  Germans.  The  exports  of  the 
country  were  still  almost  entirely  raw  products,  and  the  manu- 
factured wares  which  the  country  contributed  to  the  commerce 
of  the  world  were  of  the  most  simple  description:  yarn  of 
flax  and  hemp,  cordage,  string,  and  sacking. 

552.  Recent  history  of  the  tariff.  —  In  spite  of  these  con- 
ditions the  government  pursued  since  about  1870  a  policy 
of  protection,  which  grew  constantly  more  strict  with  the 
passage  of  time,  and  which  furnished  at  the  end  of  the  century 
the  most  extreme  example  of  protection  to  be  found  among 
civilized  states.     Comparing  the  tariff  of   1868,   which  was 
comparatively  liberal,  with  the  tariff  of  1891,  we  find  that 
duties  on  some  important  manufactures  rose  in  the  following 
measure:   on  cotton  goods  and  glassware,  to  double;   on  rails 
and  locomotives  to  quadruple  or  more.     Even  more  striking 
and  more  serious  was  the  increase  on  partly  manufactured 
wares.    Duties  rose  on  leather  and  yarns  to  twofold  or  more; 
on  petroleum  and  wrought  iron  to  threefold;  on  sulphuric  acid 
to  four  or  seven  fold;    on  cast  iron  to  tenfold.     This  is  the 
period  in  which  Germany  was  seeking  commercial  advantage 
by  bargaining  in  tariff  rates  with  other  countries,  and  in  which 
occurred  the  tariff   war  with  Germany  that  has  been  noted 
above.    At  this  time  and  again  later  Germany  was  able   to 
bring  her  eastern  neighbor  to  terms   by  financial  pressure; 
Russia  was  a  great  borrower  and  needed  the  support  of  the 
Berlin  money  market.    Russia  raised  still  more,  however,  the 
rates  of  the  tariff  in  a  revision  in  1903,  and  even  after  these 
had  been  reduced  by  treaty  bargains  they  left  the  general 
level  higher  than  before. 

553.  Development  and  cost  of  manufactures.  —  The  pro- 
tectionist policy  m  Russia  gained  its  object,  an  increase  in  the 


460  A  HISTORY  OF  COMMERCE 

manufacturing  industry  of  the  country.  The  product  of  home 
manufactures  rose  greatly  in  value,  and  the  importation  of 
foreign  manufactures  declined  in  proportion.  This  object, 
however,  was  attained  at  a  great  cost.  Russia  was  even  less 
suited  to  the  modern  system  of  manufactures  than  Italy  or 
other  states  which  we  have  considered.  It  lacked  capital, 
technical  knowledge,  leaders,  laborers  of  steadiness  and  in- 
telligence —  practically  everything  except  raw  materials,  which 
were  present  in  abundance.  Manufactures,  therefore,  were 
conducted  at  an  expense  far  above  that  common  in  other 
countries,  and  could  be  maintained  only  by  forcing  the  people 
to  pay  far  higher  prices  for  their  wares.  A  person  could  not 
get  so  much  as  a  sewing  needle  without  contributing  an  extra 
sum  to  the  support  of  the  home  manufactures.  The  policy  was 
the  more  questionable,  as  the  profits  of  these  manufactures 
went  in  large  part  to  foreign  stock  holders,  who  utilized  an 
opportunity  for  which  the  native  Russians  were  still  unpre- 
pared. Even  from  the  political  standpoint  the  policy  of  pro- 
tection in  Russia  was  attended  with  danger;  many  events 
indicated  that  the  factory  laborers  would  be  the  first  to  turn 
against  the  autocracy  which  had  brought  them  into  being. 

554.  Effect  of  the  tariff  on  agriculture.  —  The  most  serious 
aspect,  however,  of  the  Russian  tariff  was  its  effect  upon  agri- 
culture. The  great  plains  of  the  country  were  peculiarly 
adapted  to  the  use  of  modern  cultivating  and  harvesting 
machinery,  such  as  contributed  so  much  to  the  progress  of 
agriculture  in  America.  The  tariff  made  such  machinery  so 
costly,  whether  it  were  imported  or  manufactured  in  Russia, 
that  it  was  introduced  to  only  a  slight  extent.  A  Russian  esti- 
mated that  the  farmers  of  the  United  States  found  it  profit- 
able to  spend  nearly  twenty  times  as  much  for  agricultural 
implements  and  machinery  as  the  Russians.  The  peasants 
could  not  afford  even  plows,  harrows,  or  scythes  of  a  modern 
type,  and  still  used  antiquated  makeshifts.  The  mass  of  the 
people,  at  best,  were  ignorant  and  bound  by  custom,  showing 
still  the  bad  effects  of  the  servile  condition  from  which  they 


EASTERN  EUROPE  461 

had  so  recently  emerged;  and  needed  every  encouragement  to 
be  induced  to  advance  to  better  methods  of  cultivation.  Even 
artificial  fertilizers,  however  (superphosphates,  etc.),  were  bur- 
dened with  a  duty,  because  there  seemed  a  chance  to  manu- 
facture them  in  the  country;  the  result,  naturally,  was  an 
increase  in  price,  and  a  restriction  in  the  use  of  this  important 
aid  to  production. 

555.  Effect  on  railroads.  —  We  must  note  further  the  effect 
of  the  tariff  on  the  railroad  system.  Russia  has  never  gone 
through  the  period  of  transportation  by  highroads.  It  passed 
from  conditions  described  above  as  existing  during  the  first 
part  of  the  century,  to  the  use  of  the  railroad,  without  the 
transition  such  as  was  marked  by  the  use  of  turnpikes  in 
England.  Even  in  1914  the  highroads  of  the  country  were  of 
the  crudest  character,  and  internal  trade  depended  mainly  upon 
the  waterways  and  railroads,  contributing  nearly  the  same 
tonnage  to  each.  The  railroads,  therefore,  had  peculiarly 
important  functions  to  perform  in  Russia.  They  served  agri- 
culture, moreover,  to  an  unusual  degree;  the  cereals  supplied 
in  1897  more  tonnage  than  any  other  ware  carried  on  Russian 
railroads.  Yet  if  we  measure  the  development  of  railroads  by 
comparing  their  length  with  the  area  or  population  of  the  coun- 
try, we  find  that  even  at  the  close  of  the  century  the  Russians 
had  made  but  a  beginning,  and  took  the  lowest  rank  among 
all  important  peoples.  Taking  merely  Russia  in  Europe,  and 
contrasting  it  with  the  United  States,  a  country  which  also 
has  a  vast  area  and  great  vacant  spaces,  the  Russian  railway 
system  in  1913  had  not  reached  one  ninth  the  development  of 
the  American  in  comparison  with  population,  not  one  tenth 
in  comparison  with  area.  An  important  reason  for  this  back- 
wardness was  the  increased  expense  of  the  construction,  equip- 
ment, and  operation  of  railroads  due  to  the  high  tariff  on 
railroad  supplies.  Iron  may  be  said,  roughly,  to  cost  double 
or  more  of  what  it  cost  in  other  countries.  The  government 
has  not  always  been  blind  to  these  facts,  and  has  made  con- 
cessions from  time  to  time,  but  the  general  tendency  of  its 


462  A   HISTORY  OF  COMMERCE 

policy  has  been  made  only  more  glaring  by  these  occasional 
exceptions. 

556.  Commercial  reasons  for  Russia's  eastern  movement. 
—  Preceding  sections  have  sketched  some  of  the  historical  in- 
fluences which  prevented  Russia  from  taking  a  part  in  world- 
commerce  commensurate  with  the  space  she  covered  on  the 
map.     This  great  state,  which  in  the  sixties  took  only  sixth 
place  in   commerce   among   European   countries,   rose   above 
Belgium  and  the  Netherlands  in  the  early  part  of  the  seventies, 
and  secured  fourth  place,  only  to  be  passed  again  by  these 
little  states  and  for  a  time  even  by  Austria-Hungary.    In  1912 
Russia  still  ranked  sixth  among  European  countries,  eighth 
among  all  countries  of  the  world,  in  the  value  of  foreign  trade. 

This  decline  in  commercial  importance  was  due  largely  to 
the  conscious  and  voluntary  action  of  the  government,  which 
restricted  commerce  between  its  people  and  the  people  of 
the  West.  No  government,  however,  regards  all  commerce  as 
injurious,  and  the  Russian  government  endeavored  to  atone 
for  losses  in  the  West  by  expansion  in  the  East.  In  that 
direction  Russia  met  people  who  were  her  industrial  inferiors. 
By  trade  with  them  she  hoped  to  secure  imports  which  would 
not  compete  with  her  own  products,  and  sought  to  win  a  market 
for  her  newly  founded  factories.  The  manufactured  products 
which  were  too  high  in  price  to  compete  in  European  markets 
could  be  sold  in  the  East  so  long  as  the  cheaper  wares  of  western 
Europe  did  not  reach  the  field.  As  commerce  extended,  how- 
ever, in  the  last  decades  of  the  century,  Russia  saw  that  her 
eastern  markets  were  threatened  unless  she  could  apply  to 
them  the  same  policy  of  protection  which  she  had  established 
in  the  West;  and  the  government  was  forced  into  the  pol- 
icy of  military  and  political  expansion,  designed  to  close  the 
doors  of  eastern  markets  to  other  powers,  which  received  its 
check  in  the  the  war  with  Japan. 

557.  Course  of  the  Asiatic  trade.  —  In  no  period  of  the 
nineteenth  century  has  Russian  commerce  across  her  Asiatic 
frontier  formed  any  important  fraction  of  her  total  foreign 


EASTERN  EUROPE 


29 


464  A  HISTORY  OF  COMMERCE 

trade.  At  the  beginning  and  end  of  the  century  it  was  about 
one  tenth  of  the  total;  in  the  intervening  time  it  was  rather 
less.  The  difficulty  of  transportation  over  the  great  stretches 
of  almost  trackless  territory  confined  the  trade  with  the  Far 
East  to  objects  comprising  great  value  in  small  bulk  (tea, 
cloth,  etc.),  and  directed  Russian  commerce  rather  to  the  Asiatic 
countries  on  her  southeastern  frontier  (Persia,  etc.).  In  the 
second  half  of  the  century,  for  reasons  noted  above,  the  gov- 
ernment showed  an  increased  interest  in  this  branch  of  trade, 
and  lent  liberal  aid  in  furthering  Russian  interests  in  the  East. 
The  most  striking  evidence  of  the  determination  of  the  Russian 
government  to  extend  its  influence  toward  the  Pacific  Ocean 
was  the  construction  of  the  Siberian  Railway  (1891).  This 
was  rather  a  political  than  an  economic  undertaking;  it  was 
enormously  expensive,  and  failed  to  develop  sufficient  traffic 
to  pay  its  way  as  a  commercial  enterprise.  Its  failure  also 
in  the  field  of  international  politics  was  signalized  by  the  vic- 
tory of  Japan  in  the  war  with  Russia  in  1905,  which  checked 
definitely  Russia's  ambitions  to  play  a  dominant  part  in  the 
Far  East  and  put  in  her  place  an  Asiatic  power. 

558.  States  of  the  Balkan  Peninsula.  —  If  the  reader  will 
examine  a  map  of  Europe  about  1800  he  will  find  that  at  that 
date  the  state  of  Turkey  occupied  the  whole  of  the  Balkan 
Peninsula,  and  included  considerable  territories  even  to  the 
north  of  the  Danube.  The  nineteenth  century  has  witnessed 
the  liberation  of  most  of  this  land  from  Turkish  rule;  and 
some  half  dozen  independent  states  have  emerged  and  taken 
their  place  in  the  European  system.  These  states,  however, 
have  neither  in  their  political  nor  in  their  economic  organiza- 
tion reached  maturity.  Like  the  Russians,  the  peoples  of  south- 
eastern Europe  belonged  for  centuries  to  Asia  rather  than  to 
Europe,  and  the  period  of  Turkish  misrule,  lasting  down  into 
very  recent  times,  has  effectually  checked  their  development. 
Their  states  were  still  in  the  making,  constantly  disturbed  by 
racial,  religious,  and  dynastic  quarrels.  Their  economic  organ- 
ization was  still,  in  large  part,  medieval.  Roads  were  scarce, 


EASTERN  EUROPE  465 

and  good  roads  were  almost  unknown.  The  implements  and 
methods  of  agriculture  were  of  the  most  primitive  description. 
Some  cultivators  still  used  for  a  plow  a  crooked  piece  of  wood 
with  a  single  handle,  and  threshed  their  grain  on  the  open 
ground  by  driving  horses  over  it.  Manufactures  were  still 
in  the  stage  of  the  handicrafts,  and  were,  in  some  cases,  exer- 
cised by  gilds  like  those  of  the  Middle  Ages. 

559.  Commerce  of  the  Balkan  States.  —  Conditions  have 
been  rapidly  changing,  as  railroads  and  steamers  have  reached 
the  peoples  of  the  Balkans,  and  have  brought  them  in  touch 
with  the  advanced  civilization  of  the  West.  The  commerce 
of  the  Balkans,  however,  has  been  as  yet  important  rather  by 
its  promise  than  by  its  performance.  The  total  commerce  be- 
tween the  contiguous  states  Servia  and  Bulgaria  amounted  in 
1882  to  less  than  a  million  dollars.  The  aggregate  commerce 
of  the  four  Balkan  countries,  Roumania,  Bulgaria,  Servia  and 
Greece,  in  1910-11,  amounted  to  considerably  less  than  one 
per  cent  of  the  total  trade  of  the  world,  and  was  exceeded  by 
the  commerce  of  Sweden  or  Spain  or  even  of  the  little  country 
Denmark.  The  foreign  commerce  of  the  kingdom  of  Greece 
depended  almost  entirely  on  one  product,  the  so-called  Zante 
currant,  a  seedless  raisin  which  got  the  name  of  currant  from 
Corinth,  whence  it  was  carried  to  the  island  of  Zante.  The 
pig  took  in  Servia  a  position  almost  equal  in  importance  to 
that  of  the  currant  in  Greece;  great  herds  of  swine  were  kept 
in  the  oak  forests,  and  contributed  largely  to  the  chief  export, 
that  of  animal  products.  On  the  plains  of  Roumania  wheat 
was  grown  for  export  by  a  wretched  population  of  tenants  and 
laborers,  who  were  still  serfs  until  1864.  The  governments 
of  some  of  the  states  have  endeavored  by  protective  tariffs 
and  various  privileges  to  stimulate  the  growth  of  a  mining  and 
manufacturing  industry;  but  the  countries  of  the  Balkan 
Peninsula  will  find  in  agriculture  their  chief  resource  for  a  long 
time  to  come,  and  will  develop  their  commerce  most  rapidly 
by  exchanging  their  surplus  of  raw  products  for  the  manu- 
factures of  central  and  western  Europe. 


466  A  HISTORY  OF  COMMERCE 

QUESTIONS   AND   TOPICS 

1.  Character  of  internal  trade  in  Russia.    [Wallace,  chap.  12;  Palmer, 
chaps.  10-12;    Schierbrand,  chap.  9.] 

2.  The  period  of  Mongol  rule  and  its  effects.     [Wallace,  chap.  14; 
Rambaud,  History  of  Russia,  N.  Y.,  Burt,  $2,  vol.  1,  chap.  10;  Thompson, 
chap.  2;    Noble,  chap.  3.] 

3.  Condition  of  people  and  production  in  the  time  of  serfdom.    [Wal- 
lace, chap.  28;    Palmer,  chap.  5.] 

4.  Traveling  by  roads  and  rivers  in  modern  Russia  [Wallace,  chap.l.] 

5.  The  Crimean  War.     [Seignobos,  chap.  27,  first  part.] 

6.  The  period  of  reforms.     [Wallace,  chap.  27.] 

7.  Faults  of  the  Russian  administration.    [Wallace,  chap.  24,   Schier- 
brarid,  chap.  11;    Thompson.] 

8.  Emancipation  of  the  serfs.    [Wallace,  chap.  29;  Thompson,  chap. 
4;    Noble,  chap.  7.] 

9.  What  were  the  chief  exports  and  imports  of  Russia;    with  what 
countries  was  the  most  important  commerce  of  Russia  conducted?    [States- 
man's Year-Book.] 

10.  Character  and  significance  of  the  foreign  trade  of  modern  Russia. 
[Hourwich  in  Journal  of  Polit.  Econ.,  1892-3,  2:    284-290.] 

11.  Domestic  manufactures.     [Palmer,  chap.  20.] 

12.  Recent  fiscal  policy  and  protection.    [Wallace,  chap.  36;   Schier- 
brand, chap.  3.] 

13.  Manufactures  in  modern  Russia.     [Palmer,  chap.   19;    Schier- 
brand, chap.  4;    Oseroff,  The  industrial  development  of  Russia,  Forum, 

1899,  27:    129-144.] 

14.  Condition   of   the   agricultural   population   after   emancipation. 
[Wallace,  chap.  31;  Palmer,  chap.  8;  Schierbrand,  chaps.  5,  6;  Thompson, 
chap.  4;   Noble,  chap.  7.] 

15.  Political,  social,   and    economic    life    of   the    rural    population. 
[Palmer,  chap.  4;    Wallace,  chaps.  6-9.] 

16.  Famines  in  modern  Russia.     [Articles  by  various  authors  in 
Fortnightly  Review,   1891,   56:    636-652;    Forum,   1892,   13:    575-582: 
Nineteenth  Century,  1892,  31:    1-6;   Century,  1893,  46:   560  ff.,  etc.] 

17.  Faults  of  the  modern  system  of  agriculture.     [Hourwich  in  Yale 
Review,  1892-3, 1:  411-433;  in  greater  detail,  in  Columbia  Studies,  vol.  2, 
N.  Y.,  1892.] 

18.  Russian  trade  in  China.     [Calderon  in  Contemporary  Review, 

1900,  78:   389-396.] 

19.  Russia's  hold  on  Persia.    [Forum,  1900,  29:    147-153.] 

20.  Russian  railway  policy  in  Asia.     [Long  in  Fortnightly  Review, 
1899,  72:    914-925,  with  map.] 


EASTERN  EUROPE  467 

21.  Territorial  expansion  in  the  East.     fWallace,  chap.  38;    Noble, 
chap.  10;    Schierbrand,  chap.  1.] 

22.  The  Siberian  railroad.     [See  A.  L.  A.  Catalogue,  or  use  one  of 
the  following  periodical  articles:   Norman  in  Scribner's,  1900,  28:  515-541; 
Davidson  in  Century,  1904,  67 :  940  ff.;  Kinloch  in  Monthly  Review,  1901, 
2:  60-71,  with  map,  and  with  special  reference  to  trade  possibilities;  Mik- 
hailoff,  in  North  Amer.  Rev.,  1900,  170:  593-608;  Colquhoun  in  Monthly 
Review,  1900,  1:    Nov.,  40-55,  with  two  maps.] 

23.  Choose  one  of  the  more  important  states  (Turkey,  Roumania, 
Bulgaria,  Servia,  Greece)   and 

(a)  Trace  its  political  history  during  the  century.    [Seignobos,  chaps. 
20,  21.] 

(b)  Study  its  recent  commerce.     [Statesman's  Year-Book.] 


BIBLIOGRAPHY 

Though  no  history  of  Russian  commerce  has  appeared  in  English, 
there  are  many  good  books  on  the  history  and  conditions  of  the  Russian 
Empire;  and  a  considerable  number  have  been  published  within  a  few 
years.  For  bibliography  see  the  A.  L.  A.  Catalogue  and  recent  issues  of 
the  American  Historical  Review;  a  more  complete  bibliography,  with 
chronological  classification,  will  be  found  in  Skrine,  pp.  347-358.  Com- 
pare, also,  A.  L.  Morse,  Reading  list  on  Russia,  Univ.  of  State  of  N.  Y., 
State  Library  Bulletin,  Jan.,  1899,  Bibliography,  nos.  15-17.  References 
to  articles  on  Russian  commerce  in  the  first  half  of  the  century,  in  English 
and  American  periodicals,  will  be  found  in  Homans,  Cyclopedia,  p.  1659. 

Mavor,  *  Economic  History  of  Russia,  London,  1914,  2  vol.,  is  a  mon- 
umental work,  particularly  valuable  for  its  study  of  institutional  develop- 
ment. The  history  of  Russia  in  the  nineteenth  century  is  treated  by 
Seignobos,  adequately  for  most  purposes;  more  fully  by  Skrine,  Expan- 
sion of  Russia,  London,  1900  (N.  Y.,  Macmillan),  in  the  Cambridge 
Historical  Series. 

The  most  useful  books  for  our  purposes  are  the  descriptive  works, 
most  of  which  contain  considerable  historical  material.  First  of  these 
should  be  mentioned  D.  M.  Wallace,  **  Russia,  'N.  Y.,  Holt,  1877,  1905; 
references  in  the  topics  are  to  the  revised  edition,  1905.  Anatole  Leroy- 
Beaulieu,  **  The  empire  of  the  tsars,  N.  Y.,  Putnam,  1893,  has  the  rank 
of  a  classic,  but  a  large  part  of  its  three  volumes  treats  topics  removed 
from  our  direct  interest.  Among  the  smaller  books  the  most  useful  are 
the  following:  Francis  H.  E.  Palmer,  *  Russian  life,  N.  Y.,  Putnam,  1901, 
W.  von  Schierbrand,  *  Russia,  N.  Y.,  Putnam,  1904,  Edmund  Noble, 
Russia,  Boston,  Houghton,  1900,  H.  M.  Thompson,  Russian  politics, 
N.  Y.,  Holt,  1896. 


468  A  HISTORY  OF  COMMERCE 

A  work  deserving  special  mention  is  **  Industries  of  Russia,  pub- 
lished for  the  World's  Columbian  Exposition  at  Chicago,  and  edited  in 
the  English  translation  by  John  M.  Crawford,  St.  Petersburg,  1893,  5  vols. 
with  maps  and  charts.  Volumes  1  and  2,  paged  continuously,  cover  Manu- 
factures (with  historical  surveys)  and  Trade  (brief  on  foreign  commerce), 
volume  3  covers  Agriculture  and  Forestry;  4,  Mining;  5,  Siberia  and  the 
Trans-Siberian  Railroad.  I  cannot  cover  here  the  mass  of  literature  on 
Russia's  eastern  policy,  and  refer  for  that  to  the  bibliographical  aids 
mentioned  above.  The  U.  S.  Monthly  Summary,  Commerce  and  Finance, 
April,  1899,  contained  a  compilation  of  various  material  on  the  Russian. 
Empire  and  the  Trans-Siberian  railroad,  with  a  map;  another  mono- 
graph, on  European  Russia,  appeared  in  this  series  in  1904. 

On  Finland,  a  distinct  part  of  Russia  for  the  treatment  of  which  the 
text  offers  no  space,  see  N.  C.  Frederiksen,  **  Finland,  London,  1902, 
with  bibliography;  this  is  an  excellent  book,  especially  full  on  economic 
matters. 

The  Balkan  States  have  attracted  more  attention  from  writers  than 
accords  with  their  recent  commercial  importance;  for  a  general  survey 
see  Laveleye,  *  The  Balkan  Peninsula,  N.  Y.,  Putnam,  1887.  On  the 
conditions  of  commerce  in  the  peninsula  just  before  the  World  War  see 
Day,  The  pre-war  commerce  and  the  commercial  approaches  of  the 
Balkan  Peninsula,  Geographical  Rev.,  N.  Y.,  May,  1920,  9:  277-298. 


TOPICS  FOR  REVIEW 

Among  topics  suitable  for  general  review  of  the  recent  period,  (1800- 
1900),  the  following  may  be  suggested:  (a)  shipping;  (b)  transportation 
by  canals;  (c)  transportation  by  railroads;  (d)  production  and  exchange 
of  raw  textiles;  (e)  finished  textiles;  (/)  coal;  (g)  iron  and  steel;  (h)  in- 
troduction of  steam  and  power  machinery  in  manufactures;  (i)  commer- 
cial policy. 


PART   V.  —  THE   UNITED    STATES 

CHAPTER   XLV 
THE   ORGANIZATION   OF  PRODUCTION,   1789 

560.  Comparison  of  conditions  in  1789  and  in  1914.  —  The 

United  States  was  in  1914  recognized 'as  one  of  the  greatest 
countries  of  the  world  jn|area/|.in  population,  in  wealth,  in 
efficiency  of  the  organization  of  production  and  business,  and 
in  the  volume  of  internal  trade  and  foreign  commerce.  Little 
more  than  a  century  before,  when  it  began  its  career  as  an  inde- 
pendent state,  it  was  an  aspirant  struggling  merely  for  a  respect- 
able position  among  the  minor  powers.  Its  population,  which  in 
1914  was  nearly  one  hundred  million,  was  in  1790  less  than  four 
million,  placing  it  in  this  respect  far  below  the  great  states  of 
Europe,  and  not  far  above  such  little  states  as  the  Netherlands, 
Portugal,  or  Sweden.  The  whole  settled  area,  comprising  a 
strip  along  the  Atlantic  coast,  and  the  mere  beginnings  of 
settlement  beyond  the  Appalachian  Mountains,  was  less  than 
the  area  of  the  present  state  of  Texas.  The  people  were 
poor,  and  backward  in  industrial  development.  The  amount 
of  internal  trade  was  small,  even  in  proportion  to  the  scanty 
population.  The  people  were  forced  into  foreign  commerce 
by  the  necessities  of  their  condition.  They  were  as  yet  unable 
to  supply  the  needs  of  civilization  by  wares  of  their  own  pro- 
duction. They  had  as  yet  developed  no  resources  which 
assured  their  economic  position  in  commerce  with  European 
powers,  and  in  their  political  and  military  position  they  were 
so  weak  that  they  must  beg  as  favors  rather  than  demand  as 
rights  the  opening  of  markets  which  were  essential  to  their 
commercial  growth. 


NORTH  AMERICA, 
in  1782 

SCALE  OF  MILES 


b         sOo       ooo        900       1200 


THE  ORGANIZATION  OF  PRODUCTION,   1789          471 

The  sharp  contrast  between  1789  and  1914  indicates  clearly 
the  importance  of  the  subject  which  will  be  treated  in  the 
following  chapters  of  the  book,  the  history  of  the  commerce  of 
the  United  States.  The  student  is  asked  to  give  his  attention 
first  to  a  detailed  study  of  conditions  existing  about  the  year 
1789.  A  survey  of  conditions  at  that  date  will  furnish  a  sum- 
mary of  the  development  of  the  colonial  period,  and  a  basis 
for  appreciating  the  national  progress  of  more  recent  times. 

561.  Chief  exports  in  1790.  —  Following  the  plan  pursued 
in  earlier  chapters  we  shall  attend  first  to  the  exports  of  the 
country,  composed  of  those  wares  which  could  be  produced 
to  such  advantage  that  the  people  could  sell  a  surplus  of 
them  abroad,  and  so  secure  the  imports  of  which  they  stood 
in  need.  The  following  table  gives  the  chief  items  for  the 
first  year  of  our  national  existence: 

EXPORTS,  1790,  IN  MILLIONS  OF  DOLLARS 

Northern  products.  —  Flour 4.5 

Wheat 1.3 

Lumber 1.2 

Corn 1.0 

Fish 9 

Potash 8 

Southern  products.  —  Tobacco 4.3 

Rice 1.7 

Indigo -_5 

Total  (including  decimals  omitted) 16. 6 

Total  exports,  including  items  omitted 20. 2 

One  characteristic  of  this  table  is  noteworthy  because  it 
has  marked  the  exports  of  the  country  from  this  early  time  to 
the  present.  The  exports  of  the  United  States  have  always 
consisted  not  of  a  great  many  articles  sold  in  small  quantities, 
but  of  a  few  great  staples  sold  in  large  quantities.  Nine  items, 
it  will  be  observed,  comprised  over  three  fourths  of  the  total 
value,  and  the  two  items,  breadstuffs  and  tobacco,  made  up 
over  half. 


472  A  HISTORY  OF  COMMERCE 

562.  Predominance  of  agriculture ;  experiments  with  crops. 
—  The  table  shows  clearly  that  the  strength  of  the  United 
States  at  this  time  lay  in  what  the  economists  call  extractive 
industries,  devoted  to  the  production  of  raw  materials.  Some 
of  the  wares,  it  is  true,  had  undergone  the  first  stages  of  manu- 
facture (flour,  lumber,  potash,  indigo),  but  their  chief  value 
consisted  still  in  the  original  material.  In  contrast  with  present 
conditions  it  was  estimated  at  this  time  that  nine  tenths  of 
the  people  were  engaged  in  agricultural  pursuits,  and  that 
even  in  New  England,  where  industrial  pursuits  were  most 
diversified,  only  one  eighth  were  employed  in  manufactures, 
trade,  or  other  occupations  besides  agriculture.  Of  twenty-one 
presidents  of  the  United  States  (to  1880)  fifteen  were  farmers 
or  the  sons  of  farmers. 

The  agricultural  products  of  the  table  above  represent 
the  results  of  nearly  two  centuries  of  experiment  in  the  search 
for  profitable  crops.  It  is  not  easy  to  determine  what  cultures 
will  pay  under  the  conditions  of  a  new  country.  Early  settlers 
had  extravagant  hopes  of  supplying  the  European  market  with 
silk,  wine,  olive  oil,  drugs,  dyes,  etc.,  and  learned  only  by 
bitter  experience  that  the  conditions  of  nature  and  man  des- 
tined America  to  a  commercial  career  different  from  that  of 
southern  Europe  or  Asia.  Most  of  the  important  crops  and 
grasses  were  introduced  to  this  country  from  other  continents, 
Indian  corn  being,  of  course,  the  notable  exception;  and  so 
thoroughly  had  the  process  of  experiment  been  carried  out 
that  in  the  hundred  years  following  the  Revolution  only  one 
species  of  cultivated  plant  (sorghum)  was  introduced,  of  suffi- 
cient importance  to  be  enumerated  in  the  census. 

663.  Breadstuffs.  —  The  crop  of  greatest  importance  to  the 
people  of  the  American  colonies  was,  without  question,  maize 
or  Indian  corn.  This  crop,  of  native  origin,  flourished  in  all 
parts  of  the  colonies,  and  yielded,  under  the  conditions  of  a 
primitive  agriculture,  far  richer  returns  than  could  be  secured 
from  any  of  the  European  grains.  To  the  domestic  food  supply 
it  was  indispensable.  For  export  purposes,  however,  it  was 


THE  ORGANIZATION  OF  PRODUCTION,   1789         473 

less  desirable,  and  though  moderate  quantities  were  shipped 
abroad  every  year,  the  demand  of  foreign  markets,  as  appears 
in  the  table,  was  chiefly  for  wheat  and  wheat  flour.  Wheat 
was  at  this  time  a  costly  luxury  in  New  England,  but  it  could 
be  grown  to  advantage  in  the  middle  colonies  and  in  Virginia; 
and  in  the  particular  period  which  we  are  studying  it  assumed 
a  leading  position  among  the  exports.  European  countries 
had  formerly  been  unwilling  to  receive  a  product  which  com- 
peted with  their  own  agriculture,  but  the  failure  of  crops  in 
Europe,  the  outbreak  of  the  French  Revolution  (1789),  and 
the  long  wars  following,  caused  a  great  increase  in  the  demand 
for  our  food  products,  and  gave  rich  returns  to  the  wheat 
farmers  who  had  been  suffering  from  the  lack  of  a  market. 

564.  Other  products  of  northern  agriculture.  —  Aside  from 
the  cereals  the  agricultural  exports  of  the  middle  and  northern 
colonies  were  unimportant.     Many  attempts  had  been  made 
to  grow  flax  and  hemp,  to  sell  in  competition  with  the  produce 
of  Russia  and  other  Baltic  countries.     The  seed  of  the  flax 
was  exported,  but  the  preparation  of  the  fiber  was  too  trouble- 
some to  pay  the  producer,  and  though  coarse  fabrics  for  home 
wear  were  made  of  it  and  it  was  used  for  sewing  shoes  until 
the  invention  of  the  wooden  shoe  peg,  the  export  of  flax  and 
hemp  fiber  remained  insignificant. 

The  second  place  among  exports  of  northern  agriculture, 
after  breadstuff's,  was  taken  by  stock  and  meat  products. 
The  abundance  of  pasture  land  encouraged  farmers  to  raise  a- 
surplus  of  live  stock  for  sale,  though  as  yet  they  paid  but 
little  attention  to  breeding  or  to  the  proper  care  and  fattening 
of  the  animals.  Horses  were  shipped  to  Canada  and  to  the 
West  Indies,  while  salt  beef  and  salt  pork  had  a  ready  sale 
for  provisioning  ships,  and  for  export  to  the  West  Indies. 
The  export  of  live  animals  and  provisions  amounted,  however, 
to  less  than  one  million  dollars. 

565.  Southern  staples ;    tobacco.  —  Many  of  the  export 
products  above  mentioned  could  be  raised   in  the  southern 
colonies,  and  all  of  them  were,  in  fact,  produced  there  to  some 


474  A   HISTORY  OF  COMMERCE 

extent.  The  people  of  the  South,  however,  were  fortunate  in 
finding  conditions  suited  to  the  production  of  some  special 
crops,  which,  unlike  those  of  the  North,  could  not  be  produced 
to  advantage  in  Europe,  and  which  therefore  were  more  read- 
ily taken  in  trade.  The  Southerners  followed  their  interests, 
therefore,  by  raising  of  foodstuffs  only  what  they  absolutely 
needed,  and  by  applying  themselves  to  their  special  staples. 
Of  these  tobacco  was  by  far  the  most  important  throughout 
the  colonial  period.  It  was  asserted  at  one  time  that  a  man 
could  provide  grain  for  five  men  and  clothes  for  two,  by  the 
sale  of  the  tobacco  which  he  could  grow  unassisted.  Until  the 
rise  of  the  cotton  culture  tobacco  was  king  among  the  southern 
staples,  and  had  no  rival  export  at  the  North  of  equal  impor- 
tance; through  the  eighteenth  century  it  formed  about  half 
of  the  total  exports  of  the  colonies  to  England,  and  only  just 
before  the  close  of  the  century  did  it  yield  the  .leading  place 
to  wheat.  Disadvantages  of  a  one-crop  system,  entailing  sharp 
fluctuations  in  price  and  periods  of  dearth,  the  rapid  exhaustion 
of  the  soil  under  tobacco,  and  the  encouragement  of  negro 
slavery, —  all  these  evils  could  not  turn  the  planters  of  Mary- 
land and  Virginia  from  a  crop  which,  on  the  whole,  yielded 
rich  returns. 

566.  Rice  and  indigo.  —  In  Carolina  rice  took  the  position 
held  by  tobacco  in  other  southern  colonies.  Its  cultivation 
became  of  practical  importance  only  toward  1700,  starting,  it 
is  said,  from  the  gift  of  a  small  parcel  of  rough  rice  by  the 
captain  of  a  ship  bound  from  Madagascar  to  Liverpool,  who 
was  forced  to  put  into  Charleston  for  repairs.  The  grain  found 
a  ready  market  in  southern  Europe  and  in  the  West  Indies, 
and  became  soon  an  important  article  of  export,  though  the 
modern  method  of  water  culture  was  not  introduced  until 
nearly  1800. 

The  only  other  item  of  southern  produce  deserving  special 
mention  in  this  place  is  indigo.  This  plant,  the  reader  will 
remember,  was  the  source  of  a  blue  dye  which  at  the  time 
was  highly  prized  and  which,  indeed,  has  only  recently  been 


THE  ORGANIZATION  OF  PRODUCTION,   1789         475 

displaced  by  anilin  colors.  Attempts  had  been  made  in  the 
early  colonial  period  to  raise  indigo,  but  no  success  attended 
them  until  about  1750.  After  that  date  the  culture  flourished 
in  South  Carolina  and  Georgia;  aided  by  a  bounty  from  the 
British  government  the  planters  exported  large  quantities  and 
secured  handsome  returns.  The  preparation  of  indigo  was, 
however,  an  unwholesome  occupation,  as  the  plant,  after  being 
soaked  in  water,  was  left  to  rot,  giving  out  an  offensive  odor 
and  drawing  innumerable  flies.  It  was  an  indication  of  prog- 
ress, therefore,  that  indigo  culture  declined  rapidly  after  1790; 
planters  gladly  took  up  the  cotton  culture,  and  the  United 
States  soon  secured  by  importation  from  abroad  the  ware  of 
which  it  had  formerly  produced  a  surplus. 

567.  Methods  of  agriculture.  —  Though  agriculture  as  a 
source  of  wealth  overshadowed  all  other  industries  in  the 
colonies,  it  was  conducted  with  methods  which  we  should  now 
consider  extremely  inefficient  and  wasteful.  Washington  wrote 
to  an  agricultural  specialist  in  England:  "An  English  farmer 
must  have  a  very  indifferent  opinion  of  our  American  soil 
when  he  hears  that  an  acre  of  it  produces  no  more  than  from 
8  to  10  bushels  of  wheat;  but  he  must  not  forget  that  in  all 
countries  where  land  is  cheap  and  labor  is  dear  the  people 
prefer  cultivating  much  to  cultivating  well." 

The  plow,  the  most  important  implement  of  agriculture, 
was  still  at  the  time  of  the  Revolution  substantially  unchanged 
from  the  models  of  ancient  times.  The  mould-board,  of  wood 
as  the  name  implies,  was  sometimes  plated  with  sheet  iron  or 
with  strips  made  out  of  old  horseshoes.  President  Jefferson 
improved  the  shape  of  the  mould-board,  and  about  the  end  of 
the  century  the  cast-iron  plow  began  to  come  into  common 
use.  The  sickle  gave  place  to  the  scythe  and  cradle,  but 
threshing  was  still  done  with  a  flail  or  by  driving  horses  over 
the  grain.  There  was  a  marked  increase  in  the  interest  in 
agricultural  science  and  methods  about  the  time  when  the 
national  government  began,  agricultural  societies  were  founded 
in  many  states,  and  progress  thenceforth  was  more  rapid. 


476  A   HISTORY  OF  COMMERCE 

568.  Forest  products ;    potash.  —  If  the  reader,  after  this 
review  of  the  agricultural  exports  of  the  country  at  the  begin- 
ning of  its  national  existence,  will  refer  again  to  the  table 
above,  he  will  find  that  export  products  of  considerable  im- 
portance were  derived  also  from  the  fisheries  and  the  forests. 

The  eastern  slope  of  the  country  was  so  heavily  wooded 
that  trees  were  regarded  rather  as  a  hindrance  than  a  help  by 
the  colonists.  It  was  good  philosophy,  however,  to  make  the 
best  of  them;  and  the  British  government,  during  the  colonial 
period,  encouraged  the  export  of  forest  products,  to  avoid 
depending  on  the  Baltic  countries  for  the  supply  of  wood  and 
naval  stores.  The  most  spectacular  export  of  this  description 
was  that  of  the  great  masts  and  spars,  which  formerly  had 
been  reserved  for  the  government  by  the  mark  of  the  broad 
arrow,  and  which  were  hauled  out  of  the  woods  in  winter  by 
fifty  yoke  or  more  of  oxen.  Most  of  the  wood,  however,  left 
the  country  in  smaller  form:  staves  and  heading,  which  were 
sent  to  the  West  Indies  and  there  set  up  into  casks  and  hogs- 
heads for  the  carriage  of  sugar  products;  boards,  shingles,  etc. 

When  wood  ashes  are  leached,  .and  the  water  evaporated, 
the  product  is  potash;  if  this  be  refined  by  heating  it  is  termed 
pearlash.  It  is  an  impure  carbonate  of  potassium,  and  at  this 
early  stage  of  chemical  industry  it  had  an  immense  importance 
in  the  arts,  being  used  in  bleaching,  the  manufacture  of  glass, 
soap,  etc.  Besides  enjoying  a  ready  sale  potash  had  another 
peculiar  advantage  in  this  period;  it  was,  besides  the  naval 
stores  (pitch,  tar,  turpentine,  rosin),  the  only  wood  product 
which  could  be  readily  transported  on  land.  It  was,  therefore, 
a  great  resource  when  land  was  cleared;  and  practically  every 
new  settlement,  in  the  northern  colonies  at  least,  had  its  potash 
works,  in  which  useless  wood  was  converted  into  a  valuable 
export  product. 

569.  Fisheries.  —  "The  fisheries  first  and  mainly  placed 
New  England  on  its  legs."    The  people  of  the  northern  shore 
were  driven  to  the  sea  by  the  difficulties  of  life  on  land;   and 
used  the  proceeds  of  the  fishing  industry  as  the  means  of 


THE  ORGANIZATION  OF  PRODUCTION,   1789         477 

purchasing  their  imports  from  abroad,  and  part  even  of  their 
food  supply  from  other  colonies.  They  had  advantages  over 
European  competitors  in  their  nearness  to  the  great  fishing 
grounds  and  in  their  skill  in  building  and  navigating  boats; 
and  though  the  proportion  of  the  total  population  engaged  in 
fisheries  was  never  large  (about  one  thousandth  at  this  time), 
the  product  was  sufficiently  important  to  take  a  respectable 
rank  among  the  exports  of  the  country.  Every  year  more  than 
five  hundred  boats  left  the  towns  of  the  Massachusetts  coast, 
especially  Gloucester  and  Marblehead,  for  the  banks  of  New- 
foundland, while  Nantucket  and  New  Bedford  became  the 
source  of  whaling  voyages  that  reached  from  the  Arctic  to  the 
Antarctic  oceans. 

In  comparison  with  the  fisheries  the  fur  trade  had  become 
of  little  importance;  the  European  demand  for  furs  was  met  at 
this  time  by  territory  lying  to  the  north  of  the  limits  of  the 
United  States. 

570.  Chief  imports,  1791.  —  The  method,  or  rather  the  lack 
of  method,  followed  by  the  government  in  keeping  its  commer- 
cial statistics  in  early  days,  renders  it  impossible,  unfortunately, 
to  present  here  a  table  of  imports  in  1790  comparable  in  accu- 
racy and  in  detail  to  the  table  of  exports  given  above.    We 
must  content  ourselves  with  the  following  estimates  for  the 
year  1791. 

IMPORTS,  1791,  IN  MILLIONS  OF  DOLLAKS 

Articles  paying  duties  ad  valorem 17. 0 

Wines,  spirits,  malt  liquors 2.6 

Colonial  wares.  —  Sugar 1.6 

Molasses 1.4 

Coffee 5 

Tea 3 

Total,  Colonial,  including  minor 4.0 

Total,  including  minor  items  omitted 25. 0 

571.  Classes  of  wares  imported ;  manufactures.  —  The  table 
•  shows,  on  its  face,  only  one  thing  with  clearness,  that  the 

people  used  already  a  considerable  part  of  their  surplus  to 


478  A  HISTORY  OF  COMMERCE 

purchase  articles  of  food,  of  the  nature  rather  of  luxuries  than 
of  necessaries,  which  could  not  be  produced  to  advantage  at 
home.  This  feature  has  ever  since  characterized  the  import 
trade  of  the  country.  In  the  recent  commerce  of  the  United 
States  we  find,  beside  the  class  of  colonial  products,  two  other 
classes  comprising  the  bulk  of  the  remaining  imports,  manu- 
factures and  material  for  manufacturing.  Were  articles  of 
these  two  classes  masked  behind  that  large  item  of  the  table 
which  classifies  the  imports  only  with  reference  to  tariff  sched- 
ules? The  answer  can  be  given,  without  hesitation,  in  the 
affirmative.  Raw  materials  for  manufacturing  were  still,  how- 
ever, comparatively  unimportant;  most  of  the  imports  to  this 
country,  at  the  beginning  of  its  national  existence,  were  finished 
manufactures.  The  statement  made  by  a  writer  in  1818  held 
true  at  this  time :  "  Our  imports  consist  chiefly  of  articles  which 
habit  and  fashion  have  made  necessary  for  our  consumption: 
but  a  very  small  proportion  of  them  is  subservient  to  our 
arts  and  manufactures." 

To  describe  the  character  of  these  imported  manufactures 
in  detail  would  be  an  arduous  task,  for  they  included  the 
products  of  practically  all  the  handicrafts  and  factories  of 
Europe.  In  contrast  with  the  exports  of  the  country,  which 
have  been  restricted  always  to  a  few  great  staples,  the  imports, 
from  earliest  times  to  the  present,  have  been  extraordinarily 
diversified.  The  imports  included,  besides  the  items  specified 
in  the  table  above,  a  large  part  or  the  whole  of  the  metals 
used  in  the  country  (tin,  copper,  lead,  pewter,  brass,  and 
iron),  and  manufactures  of  metal.  They  comprised,  further, 
a  great  quantity  of  the  various  textiles,  of  woolen,  cotton, 
linen,  and  silk;  and  miscellaneous  manufactures  such  as  glass 
and  earthen  ware,  paper,  leather  wares,  etc. 

572.  Significance  of  the  import  of  manufactures.  —  Accept- 
ing now  as  the  most  important  characteristic  of  the  imports 
of  this  period  the  preponderance  of  manufactured  articles,  we 
must  seek  to  realize  why  this  was  so,  and  what  it  signified. 
Anticipating  the  substance  of  following  sections  it  may  be  said, 


THE  ORGANIZATION  OF  PRODUCTION,   1789          479 

in  summary,  that  the  people  of  the  United  States  supplied 
their  need  for  manufactured  articles  by  their  own  handiwork, 
so  far  as  possible,  but  that  they  found  it  unprofitable  to  attempt 
to  make  wares  the  manufacture  of  which  required  high  tech- 
nical skill,  the  use  of  machinery,  and  an  advanced  organization 
of  business.  They  depended  on  Europe,  therefore,  for  all  the 
finer  manufactures.  The  total  amount  of  manufactures  im- 
ported annually  was  not  large  in  proportion  to  the  population, 
being  less  than  $5  per  head;  yet  this  amount  comprised  most 
of  the  comforts  and  luxuries  as  well  as  many  of  the  necessaries, 
which  the  people  enjoyed.  Even  at  the  end  of  the  colonial 
period  the  average  American  led  a  life  of  struggling  and  priva- 
tion, and  could  think  himself  fortunate  if  he  won  by  his  toil 
on  land  or  at  sea  a  surplus  sufficient  to  provide  him  with  a 
few  articles  beyond  the  bounds  of  his  absolute  necessities. 

573.  Household    self-sufficiency.  —  In  contrast  with  the 
modern  scale  of  living  the  simplicity  of  the  standard  of  life 
at  this  period  can  scarcely  be  exaggerated.    Most  of  the  articles 
consumed  in  a  family  were  produced  at  home.     The  house 
was  begun  with  the  help  of  neighbors,  and  was  finished,  perhaps 
long  afterwards,  by  the  inmates  themselves.    Domestic  uten- 
sils, household  furniture,  and  farm  implements  were  still  made, 
to  a  large  extent,  on  the  farm  where  they  were  used.     The 
every-day  clothing  of  the  people,  made  from  linen  or  wool  or 
from  a  combination  of  the  two  ("linsy-woolsey"),  was  spun 
and  woven,  cut  out  and  made  into  clothes,  with  comparatively 
little  professional  help.     Carpets  were  made  from  woolen  yarn 
spun  in  the  family,  sent  away  only  to  be  dyed,  and  then  woven 
either  at  home  or  in  the  neighborhood.     The  self-sufficiency 
of  the  family  group  was  not  so  complete  in  1800  as  it  had 
been  in  1700,  but  it  continued  still  to  be  the  dominant  feature 
in  economic  life,  and  in  some  districts  lasted  for  decades  to 
come. 

574.  Town  self-sufficiency.  —  Articles  which  were  not  made 
in  the  household  were,  as  a  rule,  made  in  the  town,  and  did 
not  contribute  to  the  volume  of  distant  trade  or  of  foreign 


480  A  HISTORY  OF  COMMERCE 

commerce.  The  important  unit  in  the  economic  organization 
of  the  United  States  at  this  period  was  the  rural  group  of 
perhaps  a  few  hundred  inhabitants.  Most  of  the  people  were 
farmers,  as  has  been  said  above,  and  very  few  were  entirely 
independent  of  farming.  Some,  however,  had  the  skill  and 
implements  which  enabled  them  to  supply  the  needs  which 
could  hardly  be  met  by  household  production.  Nearly  every 
village  had  a  gristmill,  and,  if  conditions  favored,  a  sawmill. 
The  village  blacksmith  was  to  be  found  in  almost  every  settle- 
ment, and  performed  an  astonishing  variety  of  work  for  the 
people.  Toward  1800,  moreover,  a  tannery  had  become  a 
common  though  not  a  universal  feature  of  village  life,  and 
most  towns  could  now  boast  of  a  shoemaker.  Some  still 
depended,  however,  on  the  itinerant  cobbler,  and  few  were 
large  enough  at  this  time  to  furnish  paying  custom  to  special 
artisans;  and  relied  on  traveling  tinkers,  glaziers,  coopers, 
curriers,  etc.,  to  perform  the  services  proper  to  their  trades. 

575.  Development  of  household  manufactures.  —  Only  in'a 
few  lines  of  manufacture  had  the  organization  developed  beyond 
the  simple  lines  sketched  above.  The  making  of  cloth  is  an 
operation  requiring  much  time,  considerable  technical  skill,, 
and,  for  some  processes,  machinery  such  as  few  households 
would  possess.  By  1700  it  had  become  customary  to  rely 
upon  professionals  for  fulling,  the  process  which  compacts  the 
fibers  of  the  cloth,  and  fulling  mills  were  widely  distributed  in 
1800.  Carding  machines,  for  straightening  the  fibers  of  woo] 
before  spinning,  were  to  be  found  in  many  towns,  and  it  was 
more  and  more  common,  also,  to  have  the  weaving  done  out  of 
the  house,  though  this  process  was  ordinarily  attended  to  in  the 
immediate  neighborhood.  With  outside  aid  of  this  character 
the  people  of  some  parts  of  the  country  were  able  to  produce 
cloth  in  excess  of  their  needs,  and  could  use  the  surplus  in  trade. 

Nearly  every  town,  moreover,  in  the  northern  and  central 
colonies,  had  some  industry  which  utilized  the  spare  time  of 
the  inhabitants,  and  gave  them  the  means  of  exchange  with 
people  in  the  colonies  or  abroad.  For  a  characteristic  descrip- 


THE  ORGANIZATION  OF  PRODUCTION,   1789         481 

tion  take  the  following  of  Raynham,  Mass.,  1793,  when  the 
town  had  a  population  of  about  1,000:  "  Besides  the  usual 
business  of  husbandry,  numbers  are  here  employed  in  the 
manufactories  of  bar  iron,  hollow  ware,  nails,  irons  for  vessels, 
iron  shovels,  potash,  shingles,  &c." 

576.  Appreciation  and  criticism  of  American  manufactures 
at  this  time.  —  It  would  be  tedious  and  unprofitable  to  study 
in  detail  the  petty  manufactures  which  cropped  up  in  the 
various  towns  of  this  period.  Let  us  accept  as  a  summary 
the  following  statement,  applying  to  the  decade  ending  in 
1800:  "The  domestic  manufactures  best  established  are  those 
of  leather,  iron,  flax,  potters'  wares,  including  bricks,  ardent 
spirits,  malt  liquors,  cider,  paper  of  all  kinds,  hats,  stuff  and 
silk  shoes,  refined  sugars,  spermaceti  and  tallow  candles,  copper, 
brass  and  tin  wares,  carriages,  cabinet  wares,  snuff,  gun- 
powder and  salt." 

In  studying  this  description  the  reader  should  bear  certain 
facts  in  mind.  First,  the  list,  however  long  it  seems,  is  far 
from  including  all  the  wares  required  for  the  satisfaction  of 
ordinary  wants.  Second,  though  these  manufactures  are  stated 
to  be  the  ones  best  established,  there  was,  among  them  all 
only  one  sufficiently  strong  to  produce  a  considerable  surplus 
for  sale  outside  the  country;  this  was  the  rum  manufacture. 
The  people  still  relied  largely  on  importations  from  foreign 
countries  for  many  of  the  wares  enumerated.  Third,  many  of 
these  manufactures  (bricks,  cider,  snuff,  and  salt,  for  example; 
flour  and  sawmill  products  might  properly  be  included)  were 
of  a  very  simple  character,  requiring  no  great  technical  skill  or 
elaborate  machinery.  Water  power  was  used  widely,  but  steam 
power  had  not  yet  been  applied,  and  improved  machinery  had 
not  yet  been  introduced  from  Europe.  The  factory  system, 
with  its  extensive  use  of  machinery  and  its  strict  organization 
of  labor,  was  first  permanently  established  in  the  United  States 
in  1790,  at  Pawtucket,  R.  I.;  and  the  American  factories  did 
not,  for  many  years,  reach  the  English  standard  of  efficiency. 
An  English  committee  reported  in  1791  that  the  American 


482  A  HISTORY  OF  COMMERCE 

cotton  manufactures  were  of  a  coarse  grade,  of  worse  quality 
and  of  higher  price  than  those  produced  at  Manchester. 

QUESTIONS  AND  TOPICS 

1.  How  do  the  population  and  settled  area  of  the  United  States  in 
1790  compare  with  those  of  the  State  in  which  you  live  now? 

2.  Has  any  country  ever  enjoyed  such  growth  as  that  of  the  United 
States  in  the  nineteenth  century?    What  country  or  countries  come  near 
us  in  rapidity  of  progress? 

3.  Prepare  a  chart,  in  the  way  previously  suggested,  and  preserve 
it  for  comparison  with  the  exports  in  later  periods. 

4.  What  is  the  proportion  of  persons  now  occupied  in  agriculture  in 
your  State?  in  the  State  where  the  proportion  is  highest?    [Abstract  of 
Census.] 

5.  What  are  the  comparative  advantages  and  disadvantages  of  corn 
and  wheat  as  commercial  crops?    Which  crop  occupies  the  greater  acreage 
in  your  vicinity,  and  why? 

6.  Write  a  report  on  one  of  the  following  crops,  its  preparation,  uses, 
and  history  in  the  United  States: 

(a)  Flax.  ("Encyclopedias;  E.  A.  Whitman,  Flax  culture,  Boston, 
1888,  Barker  in  Quarterly  Jour.  Econ.,  1917,  31:  500-529.] 

(&)  Hemp.  [Encyclopedias;  C.  R.  Dodge,  Report  no.  8,  U.  S.  office 
of  fiber  investigations.] 

7.  Profits  and  losses  in  the  colonial  tobacco  culture.    [Bruce.] 

8.  Do  you  know  of  any  region  which  suffers  from  the  evils  of  the 
single-crop  system  now? 

9.  Advantages  and  disadvantages  of  rice  as  a  crop;  where  is  it  chiefly 
grown  now?    [Encyc.;   commercial  geographies.] 

10.  Experience  of  a  woman  as  an  indigo  planter.     [Earle,  Colonial 
dames,  Boston,  Houghton,  1895,  $1.50,  pp.  76-83.] 

11.  What  is  the  average  crop  of  wheat  per  acre  now,  in  the  U.  S., 
and  in  your  vicinity?     [Census.] 

12.  Details  of  colonial  agriculture.     [Coman,  47-62.] 

13.  The  lumber  industry  in  New  England.     [Lord,  Indust.  exper., 
part  3,  chap.  1;    Wright,  71-79.] 

14.  History  of  the  American  fisheries.     [Coman,  index;    Van  Metre 
in  Carnegie  Hist.,  vol.  2,  part  2.] 

15.  The  whale  fishery.    [Weeden,  chap.  11;   McMaster,  Hist.,  1:  63, 
with  references.] 

16.  Manufactures  imported  by  Virginia  in  the  colonial  period.    [Bruce, 
chaps.  15,  16.] 

17.  What  parts  of  the  United  States  are  now  in  a  position  like  that 


THE  ORGANIZATION  OF  PRODUCTION,   1789         483 

of  the  colonies,  devoting  their  labor  to  the  production  of  raw  materials 
and  importing  manufactures  from  the  regions  of  advanced  industry? 
What  foreign  countries  are  still  in  this  position? 

18.  Write  a  report  on  the  household  industries  of  the  colonial  period 
[Books  by  Alice  M.  Earle.] 

19.  What  household  industries  are  declining  now?     [The  preserving 
of  fruit  may  suggest  other  examples.] 

20.  A  typical  New  England  town.    [See  the  description  of  Braintree, 
Mass.,  in  C.  F.  Adams,  Three  episodes,  Boston,  1892.] 

21.  The  textile  industry  in  the  colonial  period.     [Wright,  Ind.  ev., 
43-60.] 

22.  The  rise  of  manufactures  and  the  attitude  of  Great  Britain. 
[Lord,  Indust.  exper.,  part  3,  chap.  2;    Coman,  62-76.] 

23.  The   iron   industry.      [Wright,   Ind.   ev.,   80-103.] 

BIBLIOGRAPHY 

GENERAL  BIBLIOGRAPHY.  — Channing,  Hart  and  Turner,  Guide,  revised 
ed.,  Boston,  1914,  (general)  Bogart,  Lippincott,  Emery  in  Cambridge  Mod. 
Hist.,  7:  825-829,  (classified);  Coman,  (alphabetical);  E.  R.  Johnson, 
(railways);  Dewey,  Financial  History,  N.  Y.,  Longmans,  (fiscal);  A.  L.  A. 
Catalogue,  (popular  books  in  print).  The  Literature  of  American  His- 
tory, ed.  J.  N.  Larned,  Boston,  1902,  has  been  continued  (for  most  years, 
to  and  including  1917),  by  annual  lists,  Writings  on  American  history, 
published  since  1912  by  the  Yale  University  Press. 

GENERAL.  —  The  most  important  single  works  are  the  **  Contribu- 
tions to  American  economic  history  from  the  Department  of  economics 
and  sociology  of  the  Carnegie  Institution  of  Washington:  History  of 
domestic  and  foreign  commerce  of  the  U.  S.,  by  E.  R.  Johnson,  T.  W.  Van 
Metre,  G.  G.  Huebner  and  D.  S.  Hanchett,  2  volumes  (cited  hereafter 
as  Carnegie  History) ;  History  of  transportation  in  the  U.  S.,  before  1860, 
under  direction  of  B.  H.  Meyer;  History  of  Manufactures  in  the  U.  S., 
1607-1860,  by  Victor  S.  Clark.  Foreign  trade  is  treated  in  connection 
with  other  topics  in  N.  S.  Shaler,  ed.,  *  The  U.  S.,  N.  Y.,  Appleton,  1894; 
C.  M.  Depew,  ed.,  *  Amer.  commerce;  T.  D.  Woolsey,  ed.,  First  century 
of  the  Republic,  N.  Y.,  Harper,  1876;  McMaster,  *  Hist,  (general  narra- 
tive); Bogart,  *Econ.  hist.,  (manual);  Lippincott,  *  Econ.  develop- 
ment (manual);  Wright,  Ind.  ev.  (manual);  Coman,  *  Ind.  hist,  (manual). 
On  special  branches  of  foreign  trade  see  S.  J.  Chapman,  History  of  trade 
between  United  Kingdom  and  U.  S.,  Lond.  and  N.  Y.,  1899;  F.  R.  Rutter, 
The  South  American  trade  of  Baltimore,  Baltimore,  1897;  J.  M.  Callahan, 
American  relations  in  the  Pacific,  Baltimore,  1901. 

COMMERCIAL  POLICY.  —  On  tariff  history  **  Taussig  is  by  far  the 
best  guide;  of  the  many  other  books  on  the  subject  (see  bibliographies 


484  A  HISTORY  OF  COMMERCE 

above)  most  are  too  prejudiced  to  be  put  in  the  hands  of  immature  stu- 
dents. On  the  merchant  marine  and  shipping  policy  see  **  W.  L.  Marvin, 
**  J.  R.  Spears,  and  *  W.  J.  Abbot.  For  defence  of  protection  and  sub- 
sidies, W.  W.  Bates,  American  marine,  Boston,  1893,  American  Naviga- 
tion, Boston,  1902;  for  criticism,  D.  A.  Wells,  Our  merchant  marine, 
N.  Y.,  1890. 

SPECIAL  TOPICS.  —  Readers  should  consult  the  bibliographies  listed 
above  for  references  on  particular  industries.  The  histories  of  Ringwalt, 
Hammond,  and  Swank  are  likely  to  prove  especially  useful. 

SOURCES.  —  The  chief  source  is  the  annual  report  on  commerce  and 
navigation,  which  is  cited  hereafter  by  abbreviation,  Com.  &  Nav.  Reports 
for  the  years  from  1789  to  1823  are  in  the  collected  set  of  American  State 
Papers;  later  reports  must  be  sought  in  the  set  of  Congressional  docu- 
ments. The  Check-list  of  Public  Documents,  Washington,  3d.  ed.,  1911, 
is  an  indispensable  aid  in  using  government  publications. 

EARLY  AMERICAN  COMMERCE 

COLONIAL.  —  **  Weeden,  **  Bruce,**  Beer.  More  general  in  charac- 
ter are  the  various  writings  (see  A.  L.  A.  Catalogue)  of  *  John  Fiske, 
*  C.  M.  Andrews,  *  Alice  Morse  Earle,  *  Sydney  G.  Fisher.  On  commer- 
cial policy  of  the  colonies  see  (besides  Beer,  and  Hill  cited  below)  A.  A. 
Giesecke,  American  commercial  legislation  before  1789,  Univ.  of  Penn., 
N.  Y.,  1910.  On  manufactures  see  Rolla  M.  Tryon,  *  Household  manu- 
factures in  the  U.  S.,  1640-1860,  Univ.  of  Chicago  Press;  on  shipping, 
R.  D.  Paine,  *  Ships  and  Sailors  of  old  Salem,  N.  Y.,  1909,  and  R.  E.  Pea- 
body,  *  Merchant  venturers  of  old  Salem,  Boston,  1912. 

EARLY  NATIONAL  PERIOD.  —  Mahan,  **  War  of  1812,  vol.  1;  Fiske, 
**  Critical  period,  Boston,  Houghton,  1899,  $2;  McMaster,  **  History, 
and  **  Chapter  9  of  Cambridge  Mod.  Hist.,  vol.  7.  On  the  development 
of  the  commercial  organization,  S.  E.  Baldwin,  American  business  corpora- 
tions before  1789,  Amer.  Hist.  Review,  April,  1903,  8:  449-465;  G.  S. 
Callender,  **  Early  transportation  and  banking  enterprises,  Quarterly 
Jour,  of  Econ.,  Boston,  Nov.,  1902,  17:  111-162.  On  commercial  policy, 
William  Hill,  **  First  stages  of  tariff  policy,  Pub.  Amer.  Econ.  Assoc., 
1893,  8:  462-614;  T.  W.  Page;  **  Earlier  commercial  policy,  Journal  of 
Pol.  Econ.,  Chicago,  1901-2,  10:  161-192;  Henry  C.  Adams,  *  Taxation 
in  U.  S.,  Baltimore,  1884. 


CHAPTER   XLVI 
INTERNAL   TRADE  AND  FOREIGN   COMMERCE,   1789 

577.  Development  of  internal  trade  1789-1914.  —  It  will  be 
impossible,  in  the  later  chapters  of  this  book,  to  describe  in 
detail  the  development  of  the  internal  trade  of  the  United 
States.     This  trade  has  grown  to  such  proportions  that,  at 
the  present  day,  it  far  outranks  in  volume  and  importance 
the  foreign  commerce  of  the  country.     The  reader  may  be 
trusted  to  realize  this  fact,  and  to  have  some  knowledge  of 
the  character  and  organization  of  internal  trade  at  the  present 
day.     It  is  not  probable,  however,  that  he  knows  the  humble 
origins  from  which  this  trade  has  risen;   and  a  description  of 
the  conditions  and  character  of  internal  trade  about  1789  will 
enable  him  to  appreciate  the  progress  of  the  past  century, 
even  though  the  different  steps  in  progress  receive  but  scant 
mention  in  the  narrative. 

578.  Condition  of  the  roads ;  effect  on  freight  traffic.  —  The 
roads,  which  furnished  the  only  means  of  communication  and 
transportation  by  land,  were  still  the  earth  roads  of  the  colonial 
period,  thick  with  dust  in  summer,  and  absolute  sloughs,  with 
mud  a  foot  or  more  deep,  during  the  thaws  of  winter  and  spring. 
During  the  greater  part  of  the  colonial  period  wagons  were  a 
rarity,  because  there  was  so  little  opportunity  to  use  them. 
Men  used  mere  sledges  on  the  farm,  and  traveled  or  carried 
their  produce  from  one  farm  to  another  on  horseback.    In  the 
northern  States  the  facilities  for  land  carriage  were  good  in 
only  one  season,  winter,  when  the  periods  of  sleighing  enabled 
the  people  to  make  the  market  trips  and  visits  which  were 
impracticable  at  other  times.     Even  near  the  large  towns 
laden  carts  had  to  be  drawn  by  two  to  six  oxen,  when  there 
was  no  snow  on  the  ground. 

485 


486  A   HISTORY  OF  COMMERCE 

When  there  was  no  other  means  of  transportation,  as  in 
the  case  of  the  settlements  west  of  the  Alleghany  Mountains, 
wares  were  carried  over  the  roads  in  wagons,  sometimes  for  a 
distance  of  hundreds  of  miles;  but  such  instances  of  extensive 
land  transport  were  exceptional,  and  the  freight  charges  were 
so  high  that  only  articles  of  the  first  necessity,  as  salt  and  iron, 
could  pay  for  carriage. 

579.  Sparsity  of  passenger  traffic.  —  Some  men  lived  and 
died  in  the  town  where  they  were  born,  without  visiting  another 
town  a  dozen  miles  distant.     There  was  so  little  intercourse 
between  the  adjoining  towns  of  Easthampton  and  Southampton, 
on  Long  Island,  that  each  town  preserved  individual  peculiari- 
ties of  pronunciation  down  even  to  1800.     Throughout  the 
colonial  period,  and  even  in  the  days  of  the  early  Federal 
government,  it  was  very  difficult  to  collect  delegates  at  a 
political  gathering;  and  it  was  not  uncommon  for  men  to  make 
their  wills  before  starting  to  a  State  convention  in  Pennsyl- 
vania.   Travel  by  stage-coach  did  not  become  of  importance 
until  well  into  the  nineteenth  century.     In  1783  two  stage- 
coaches, consuming  a  week  or  ten  days  on  the  trip,  sufficed  for 
the  travel  between  Boston  and  New  York;  though  a  few  years 
later  (1794)  twenty  stages  were  employed.    Postage  rates  for 
a  single  letter  ranged  from  8  to  25  cents,  according  to  the 
distance,  and  mails  were  infrequent. 

580.  Relatively  great  importance  of  waterways.  —  Like  the 
people  of  the  Middle  Ages,   the  inhabitants  of  the  United 
States  at  this  period  were  driven  to  the  use  of  water  transport 
by  the  difficulty  of  transportation  on  land.    Rivers  which  are 
used  now  only  by  canoes  and  pleasure  boats  were  then  impor- 
tant means  of  communication  and  transportation.    The  Con- 
necticut River  has  now  a  scant  traffic  as  far  as  Hartford, 
about  forty  miles  from  its  mouth;  in  1816  we  read,  "The  Con- 
necticut River  is  navigable  200  miles  above  Hartford,  for 
Boats,  of  15  tons,  and  50  miles  higher,  for  Floats  and  Pine 
Timber";    large  quantities  of  potash  were  carried  down  the 
river  even  from  the  Canada  line.     The  Hudson  and  other 


INTERNAL   TRADE  AND   FOREIGN  COMMERCE       487 

rivers  were  the  channels  through  which  export  products  were 
collected  and  brought  to  the  sea,  and  the  farmers  of  central 
and  western  New  York  sent  their  wares  to  market  by  rafts 
and  "arks"  on  the  Delaware  and  Susquehanna.  Waterways 
were  of  especial  importance  in  the  southern  States,  where  the 
means  of  land  transportation  were  even  less  developed  than 
in  the  North;  tobacco  was  brought  to  the  wharves  on  inlets 
and  rivers  by  "rolling-roads,"  rough  tracks  over  which  the 
hogsheads  were  rolled  with  the  assistance  of  a  horse. 

681.  Importance  of  the  country  store.  —  The  great  institu- 
tion of  trade  at  this  period  was  the  country  store,  which  col- 
lected the  surplus  products  of  the  townspeople  and  gave  them 
in  exchange  the  wares  imported  from  abroad.    Every  town  of 
any  size  had  one  of  these  stores,  and  only  the  largest  towns 
had  distinct  shops  for  the  sale  of  special  articles.    The  stock 
in  trade  of  one  of  the  typical  country  stores  included  all  of  the 
articles  which  have  been  mentioned  among  the  imports  of 
the  country :  sugar,  molasses,  tea,  coffee,  metals,  and  hardware, 
cloth,  thread,  books,  glass,  earthenware,    etc.     The    list   on 
the  other  side  of  the  store-keeper's  books  would  be  as  long, 
for  it  included  all  the  export  products  of  the  country,  and 
some  wares  which  were  sent  to  market  in  the  large  towns  or 
in  other  States.     The  merchant  must  always  be  prepared  to 
receive  in  pay  for  his  goods  "Grain  of  all  kinds,  beef,  pork, 
poultry,    cheese,    butter,    eggs,    nuts,    berries,    hides,    tallow, 
candles,  lard,  domestic  flannels,  feathers,  quills,  braided  straw 
hats,  potatoes,  apples  and  other  fruits,  both  green  and  dried, 
home-made  brooms,  flax  and  flax  seed,  cider  and  domestic 
wines,  etc."    At  the  period  which  we  are  studying,  well  past 
the  close  of  the  colonial  period,  barter  was  still  the  usual  form 
of  exchange,  and  money  rarely  passed  at  the  transactions  in 
the  store  or  in  the  trade  between  the  townspeople  and  the 
village  artisans. 

682.  Benefits  and  disadvantages  of  the  country  store. — 
The  country  store  was  the  focus  of  the  village,  not  only  in 
economic  but  in  political  and  social  life  as  well.    There  was 


488  A   HISTORY  OF  COMMERCE 

no  better  training  school  in  the  world  for  the  study  of  human 
nature  and  the  development  of  business  sense.  Practically  all 
of  the  business  life  of  the  times  was  concentrated  in  these 
stores,  and  it  is,  therefore,  not  surprising,  that  few  men  rose 
to  eminence  later  in  the  mercantile  world  who  had  not  passed 
a  period  of  apprenticeship  in  one  of  them.  Charles  Tiffany, 
Levi  P.  Morton,  E.  D.  Morgan,  H.  B.  Claflin;  of  a  later  period 
Marshall  Field,  Pullman,  Pillsbury,  Armour,  J.  D.  Rockefeller, 
J.  J.  Hill,  and  many  others;  all  these  rose  from  the  position  of 
•clerk  in  a  general  store  to  the  place  which  they  attained  in  later 
life. 

From  the  standpoint  of  the  villagers,  however,  it  was  a 
great  disadvantage  to  have  the  market  for  their  produce 
restricted  to  the  store  in  their  immediate  vicinity.  The  store- 
keeper in  the  smaller  towns  had  no  competitors,  and  enjoyed 
a  practical  monopoly  of  trade  of  which  he  took  full  advantage 
in  driving  his  bargains.  In  the  northern  colonies,  where  the 
difficulties  of  transportation  were  leveled  by  the  snows  of  win- 
ter, the  people  could  attain  a  certain  measure  of  independence 
of  the  country  store  by  making  market  trips  to  one  of  the 
larger  towns.  Neighbors  would  agree  upon  a  date  and  set 
off,  sometimes  in  a  troop  of  fifty  or  sixty.  They  loaded  their 
sleighs  with  a  supply  of  food  for  the  journey,  and  with  the 
produce  of  the  farm  and  household,  and  sought  out  the 
nearest  large  town,  Portland,  Newburyport,  Boston,  Provi- 
dence, Springfield,  Hartford,  etc.  In  one  of  these  market 
centers  they  could  make  much  better  bargains  than  at 
home. 

583.  Relative  smallness  of  interstate  trade.  —  When  the 
products  of  the  country  had  been  collected  at  the  large  coast 
towns  by  the  farmers  and  store-keepers,  they  were,  for  the 
most  part,  exported  to  foreign  countries.  Interstate  commerce 
was  as  yet  comparatively  small.  There  was,  it  is  true,  an  active 
coasting  trade,  but  this  was  employed  chiefly  in  the  collection 
and  distribution  of  goods  along  short  stretches  of  coast.  Small 
vessels  plied  frequently  from  the  large  ports  like  Boston.  New 


INTERNAL   TRADE  AND   FOREIGN  COMMERCE       489 

York,  Philadelphia,  and  Charleston,  to  the  country  districts 
on  either  side,  but  rarely  made  extensive  trips,  as  from  Boston 
to  Charleston,  for  instance. 

Commerce  between  States  as  distant  even  as  Massachusetts 
and  South  Carolina  existed  and  was  by  no  means  insignificant 
in  absolute  amount.  The  northern  colonies  sent  a  part  of 
their  surplus  of  rum,  live  stock,  dairy  products,  and  home- 
made cloth  to  the  South,  and  brought  back  tobacco  or  bills 
on  England  which  they  could  cash.  Still,  comparing  this 
trade  with  other  elements  of  internal  trade,  with  the  foreign 
commerce  of  the  time,  or  with  interstate  commerce  of  later 
times,  the  striking  thing  about  it  is  not  that  it  was  so  large, 
but  that  it  was  so  small. 

584.  Share  of  different  States  in  foreign  commerce.  —  The 
relative  contributions  of  different  parts  of  the  country  to  its 
foreign  commerce  can  be  shown  by  the  following  summary, 
giving  the  exports  by  localities  in  the  year  1791.  The  chief 
States  ranked  as  follows,  giving  values  in  millions  of  dollars 
and  indicating  the  leading  ports  in  parenthesis:  Pennsylvania, 
3.4  (Philadelphia);  Virginia,  3.1  (Bermuda  Hundred,  Norfolk); 
South  Carolina,  2.6  (Charleston);  Massachusetts,  2.5  (Boston); 
New  York,  2.5  (New  York);  Maryland,  2.2  (Baltimore).  No 
other  State  or  port  exported  as  much  as  one  million;  and 
exports  from  all  the  other  States  together  amounted  to  little 
over  one  tenth  of  the  total  of  nineteen  millions. 

The  striking  feature  of  the  table  is  the  relative  importance 
of  the  southern  States  in  foreign  commerce,  an  importance 
which  they  were  destined  to  hold  for  a  long  time  to  come,  as 
the  cotton  industry  was  developed.  It  must  be  remembered, 
however,  that  the  figures  refer  only  to  the  export  trade,  and 
that  there  would  be  considerable  changes  in  rank  if  we  could 
include  the  import  trade.  Taking  as  a  rough  means  of  meas- 
uring imports  the  amount  of  duties  collected,  we  find,  for  ex- 
ample, in  the  first  year  of  the  national  government,  that  though 
Pennsylvania  again  headed  the  list,  the  second  and  third  in 
rank  were  New  York  and  Massachusetts  respectively,  while 


490  A  HISTORY  OF  COMMERCE 

the  southern  States  ranked  lower  by  very  considerable  amounts. 
This  period  which  we  are  studying  was,  moreover,  one  of 
rapid  change,  marked  especially  by  the  development  of  the 
central  and  northern  colonies.  Taking  the  year  1795,  when 
these  colonies  were  profiting  by  a  great  increase  in  their  food 
exports,  and  when  the  cotton  trade  was  still  undeveloped, 
New  York  had  risen  to  the  second  place  in  exports  and  Massa- 
chusetts to  the  third. 

585.  Development  of  the  chief  seaports  into  cities.  —  The 
seaports  named  in  the  preceding  section  had  gained  from 
trade  an  amount  of  wealth  and  population,  which,  however 
small  it  may  seem  from  the  modern  standpoint,  put  them  in 
a  class  above  the  ordinary  towns,  and  made  them  the  repre- 
sentatives of  a  more  advanced  business  organization.  The 
most  populous  of  these  places  had  in  1790  a  population  of  only 
about  30,000  (in  thousands,  New  York  33,  Philadelphia  28, 
Boston  18,  etc.) ;  and  the  total  number  of  people  living  in  towns 
of  over  8,000  inhabitants  was  still  only  about  130,000.  In 
other  words,  only  one  person  in  thirty  lived  in  a  large  town 
or  city.  The  budding  cities  retained  many  of  the  rural  char- 
acteristics of  the  towns  from  which  they  had  grown.  A  mere 
beginning  had  been  made  in  paving  the  streets,  and  many 
people  still  kept  kitchen  gardens.  The  price  of  provisions, 
however,  was  rising  rapidly,  and  the  cities  had  become  depend- 
ent on  trade  with  the  country  districts  for  most  of.  their 
supply.  Cattle  were  fattened  in  the  Connecticut  valley  for  the 
New  York  and  Philadelphia  markets,  and  wood  for  heating 
and  building  was  brought  by  coasting  vessels  from  considerable 
distances. 

The  large  towns  could  boast  of  a  diversified  industrial 
population,  in  which  many  special  branches  of  manufacture 
were  represented,  and  of  numerous  shops;  Boston  was  credited 
with  366  stores  in  the  enumeration  of  1789.  The  first  commer- 
cial bank  of  discount  and  deposit  in  the  United  States  began 
operations  in  Philadelphia  in  1782,  and  about  1800  there  were 
33  banks  of  this  kind  in  the  country. 


INTERNAL   TRADE  AND  FOREIGN  COMMERCE      491 

586.  Foreign  countries  of  the  greatest  commercial  impor- 
tance to  the  United  States.  —  An  indication  of  the  direction 
of  commerce  is  furnished  by  the  following  table,  showing  the 
chief  countries  to  and  from  which  the  United  States  shipped 
wares  in  1790.    Figures  give  the  values  in  millions  of  dollars. 

Exports          Imports 
Great  Britain  and  her  dominions 9.3  15. 2 

Including  British  West  Indies 2.0 

France  and  her  dominions 4.6  2.0 

Including  French  West  Indies 3.2 

Spain  and  her  dominions , 2.0  .3 

Including  Spanish  West  Indies 1 

The  Netherlands  and  her  dominions 1.9  1.1 

Including  Dutch  West  Indies 6 

Portugal  and  her  dominions 1.2  .5 

The  figures  of  imports  are  based  on  estimates,  and  no  sum 
is  given  for  the  total  amount  of  the  year;  the  total  exports 
were  but  slightly  above  twenty  million,  and  countries  the  names 
of  which  do  not  appear  received  but  insignificant  amounts  of 
our  goods. 

587.  Insignificance  of  direct  trade  with  Asia  and  Africa.  — 
Some  reasons  for  the  direction  of  American  commerce  at  this 
period  will  appear  in  the  next  chapter,  in  which  the  commercial 
policy  of  European  countries  will  be  discussed.     I  propose 
here  merely  to  point  out  some  of  the  striking  facts  shown  by 
the  table,  and  to  indicate  their  connection  with  the  develop- 
ment of  American  commerce  in  the  colonial  period. 

Attention  may  be  drawn,  first  of  all,  to  the  significance  of 
omissions  from  the  table.  In  the  year  in  question  the  United 
States  sent  to  the  two  great  continents  of  Africa  and  Asia 
less  than  one  third  of  a  million  dollars  of  exports.  The  im- 
ports, especially  from  Asia,  were  probably  somewhat  larger, 
for  American  vessels  had  begun  to  frequent  the  ports  of  East 
India  and  China,  and  to  bring  direct  from  them  the  rich  car- 
goes which  formerly  had  reached  America  through  the  hands 
of  English  middlemen.  Still,  any  reasonable  estimate  of  the 


492  A  HISTORY  OF  COMMERCE 

trade  with  distant  continents  would  leave  it  insignificant  in 
comparison  with  the  European  trade,  which  formed  the  main- 
stay of  American  commerce. 

588.  Unique  position  of  England  in  trade  with  the  United 
States.  —  Of  the   European  countries  there  was  one  which 
occupied  a  position  of  commanding  prominence.    Great  Britain 
received  of  our  goods  more  than  all  the  rest  of  Europe  together, 
and  sent  us  of  her  own  far  more  than  all  the  other  European 
states  could  supply.     It  is  noteworthy,  and  was  so  regarded 
at  the  time,  that  this  country,  after  a  bitter  struggle  for  political 
and  commercial  independence,  and  after  having  broken  the 
bonds  which  were  supposed  to  hold  her  in  subjection  to  the 
English  market,  should  voluntarily  resume  the  trade  relations 
which  had  formerly  been  considered  so  oppressive.    The  great 
amount  of  our  trade  with  England  is  the  more  remarkable,  as 
it  covered  a  considerable  amount  of  trade  with  other  countries. 
England  felt  as  yet  no  great  need  for  our  export  products,  and 
forwarded  to  other  countries  a  considerable  part  of  what  she 
received.     Of  the  imports  which  we  received  from  England, 
on  the  other  hand,  while  the  greater  part  was  doubtless  the 
product  of  English  manufacturing  industry,  there  were  many 
wares  which  came  from  other  countries,  but  which  we  found 
could  be  purchased  more  conveniently  in  England  than  at 
the  original  place  of  production. 

589.  Commerce  with  the  rest  of  Europe.  —  It  was  but 
natural  that  the  United  States  should  have  a  commerce  of 
some  importance  with  states  like  France  and  the  Netherlands, 
which  were  still  among  the  leaders;  and  it  can  only  be  regarded 
as  surprising  that  this  commerce  was  so  small  in  comparison 
with  that  with  England.    Our  trade  with  eastern  Europe  was 
carried  on  so  largely  through  England  that  Germany  and  the 
Baltic  countries  would  make  but  an  insignificant  showing  if 
they  were  included  in  the  table.    Our  trade  with  southern 
Europe,  however,  was  evidently  governed  by  other  conditions. 
Portugal  and  Spain  could  furnish  few  desirable  wares  of  their 
own  production,  except  wine;  the  table  shows  that  the  imports 


INTERNAL   TRADE  AND  FOREIGN  COMMERCE       493 

from  those  countries  were  small.  They  offered,  however,  what 
we  sought  in  vain  in  northern  Europe,  a  ready  market  for 
our  fish,  cereals,  and  other  foodstuffs,  and  were  hence  of  great 
importance  to  our  export  trade.  Commerce  with  the  Medi- 
terranean countries,  which  had  been  interrupted  during  the 
Revolution,  had  not  since  then  been  developed  to  any  con- 
siderable proportions,  because  of  the  ravages  of  the  Algerine 
pirates.  These  countries  had  formerly  taken  a  quarter  of  our 
fish  exports,  and  about  one  sixth  of  our  wheat  and  flour  ship- 
ments; and  trade  with  them  revived  later  when  our  navy  had 
brought  the  pirates  to  terms. 

590.  Importance  of  the  West  Indies  as  an  outlet  for  wares, 
excluded  from  Europe.  —  A  place  of  very  peculiar  importance 
in  the  commercial  economy  of  the  American  people,  in  the 
colonial   period  and   well  past   the    time  which  we  are  now 
studying,  was  taken  by  the  West   Indian  islands.     Of  the 
chief  products  of  the  United  States  those  coming  from  the 
South,   especially  tobacco,    were   sure  of  a  good  market  in 
Europe,  and  were  a  ready  means  of  purchasing  the  manufac- 
tures which  the  people  needed  to  import.    The  chief  products 
of  the  North,  however,  including  breadstuffs,  provisions,  and 
fish,  enjoyed  no  such  favorable  reception.    The  statesmen  of 
England  and  other  countries  clung  still  to  the  plan  of  protecting 
domestic  agriculture  by  assuring  it  the  home  market,   and 
desired  to  encourage  domestic  fisheries  as  a  means  of  supporting 
the  navy.    In  the  colonial  period,  therefore,  the  staple  products 
of  the  central  and  northern  colonies  were  kept  out  of  England 
and  other   states  by  heavy  duties  or  by  prohibitions.    The 
people  of  those  colonies,  therefore,  were  at  a  great  disadvantage 
in  their  trade  with  the  mother  country:  they  found  it  difficult 
to  secure  the  means  of  paying  for  the  English  manufactures 
which  they  imported,  and  were  forced  to  rely  in  some  measure 
on  the  crude  products  of  their  own  domestic  manufactures, 
as  described  in  a  previous  chapter. 

591.  Character  of  commerce  with  the  West  Indies;  trian- 
gular trade.  —  The  very  products,  however,  which  were  rejected 


494  A   HISTORY  OF  COMMERCE 

in  Europe,  were  keenly  desired  in  the  West  Indies.  The 
islands  had  become  the  great  source  of  the  world's  sugar 
supply,  and  the  advantages  of  sugar  production,  under  the 
system  of  slave  labor,  were  so  great  that  planters  neglected 
all  other  crops  and  did  not  produce  even  a  sufficient  amount 
of  food  for  their  laborers.  They  were  eager  to  purchase  food 
either  by  the  direct  exchange  of  sugar  and  molasses,  or,  what 
amounts  to  the  same  thing,  by  giving  the  seller  bills  on  Europe 
drawn  against  sugar  products  shipped  thither.  They  offered 
a  ready  market,  therefore,  for  the  wheat,  flour,  corn,  meat, 
and  fish  of  the  mainland,  and  purchased  also  large  quantities 
of  lumber  and  shingles  for  building,  staves  for  hogsheads,  etc. 
The  colonies  of  the  mainland  took  in  pay  considerable  amounts 
of  sugar  and  molasses  for  their  own  use,  and  took  molasses 
also  for  the  manufacture  of  rum,  of  which  part  was  exported. 
On  the  whole,  however,  the  mainland  exported  to  the  islands 
more  than  it  received  from  them,  and  had  thus  a  credit  balance 
with  which  it  could  liquidate  its  debts  for  European  manufac-. 
tures.  The  conditions  thus  gave  rise  to  a  triangular  trade: 
the  mainland  shipped  food  and  lumber  to  the  West  Indian 
islands;  the  islands  shipped  sugar  products  to  Europe;  and 
Europe  shipped  manufactures  to  the  American  mainland,  thus 
closing  the  transaction.  So  strong  was. the  economic  demand 
for  a  trade  of  this  description,  that  the  attempts  of  European 
governments  to  check  it  had  proved  entirely  unsuccessful  in 
the  colonial  period;  restrictions  were  evaded  by  smugglers  or 
were  openly  defied.  The  problems  of  policy  relating  to  this 
and  other  parts  of  the  American  trade  after  1789  will  be  treated 
in  the  next  chapter. 

592.  Development  of  ship-building  in  the  colonial  period.  — 
A  resource  of  the  United  States  which  deserves  to  be  mentioned, 
before  we  close  this  survey  of  the  conditions  of  commerce 
about  1789,  was  the  building  and  sailing  of  ships.  The  colonies 
were  at  first  dependent  on  the  mother  country  for  the  vessels 
which  they  used.  Most  of  the  raw  materials  for  ship-building 
were,  however,  abundant  in  America;  and  the  construction  of 


INTERNAL   TRADE  AND  FOREIGN  COMMERCE       495 

ships,  unlike  other  manufacturing  industries,  was  rather  helped 
than  hindered  by  British  colonial  policy,  which  put  colonial 
vessels  on  the  same  footing  as  those  which  were  built  at  home, 
and  protected  them  from  the  competition  of  the  ships  of  other 
countries.  An  active  ship-building  industry  grew  up,  there- 
fore, especially  in  New  England,  where  ship  timber  of  the 
finest  quality  was  abundant,  and  where  the  difficulties  of  life 
and  the  discouragement  of  staple  exports  forced  the  people  to 
make  the  most  of  every  resource.  A  petition  of  Boston  citizens 
in  1746  calls  ship-building  "the  ancient  and  almost  the  only 
Manufacture  the  Town  of  Boston  ever  had."  In  the  Massa- 
chusetts towns  a  ship  could  be  built  of  oak  for  $24  a  ton, 
while  in  England,  France,  or  the  Netherlands  an  oak  vessel 
cost  $50  to  $60  a  ton,  and  even  the  fir  vessels,  built  on  the 
Baltic,  inferior  in  strength  and  durability,  cost  $35  a  ton. 
The  colonies,  therefore,  could  supply  not  only  their  own  wants, 
but  also  could  sell  ships  abroad;  before  the  Revolution  more 
than  a  third  of  British  tonnage,  it  is  said,  was  American  built. 
593.  Extension  of  American  shipping.  —  The  colonists  were 
as  proficient  in  the  sailing  as  in  the  building  of  ships,  and 
carried  on  a  large  part  of  the  ocean  traffic  which  served  the 
needs  of  American  commerce.  In  the  first  year  of  the  national 
government  considerably  more  than  half  of  the  tonnage  enter- 
ing the  ports  of  the  United  States  from  foreign  countries  was 
American,  and  English  ships  were  the  only  serious  competitors. 
The  bulk  of  American  shipping  was  engaged  in  the  West 
India  trade,  but  American  ships  carried  also  nearly  half  of  the 
commerce  between  the  United  States  and  Europe,  in  spite  of 
the  adverse  policy  of  European  states,  designed  to  exclude 
American  ships  from  commerce  with  them  and  with  their 
colonies.  Driven  further  afield  by  this  policy,  American 
skippers  began  to  seek  commercial  connections  with  more 
distant  countries,  from  which  wares  had  reached  them  hitherto 
only  through  middlemen.  An  American,  ship  sailed  for  the 
first  time  to  China  in  1784;  in  1788  two  ships  were  advertised 
as  loading  at  Boston  for  the  Isle  of  France  (Mauritius)  and 


496  A  HISTORY  OF  COMMERCE 

India,  and  "anybody  wishing  to  adventure  to  that  part  of 
the  world  may  have  an  opportunity  of  sending  goods  on 
freight";  soon  afterward  a  Philadelphia  ship  made  the  round 
voyage  to  China  in  less  than  a  year.  A  vivid  impression  of 
the  boldness  and  skill  of  American  mariners  of  this  period  is 
given  by  the  voyage  of  the  Experiment  to  China.  This  boat, 
a  sloop  of  eighty  tons,  no  larger  and  no  more  seaworthy  than 
the  sloops  which  now  bring  bricks  down  the  Hudson  River  to 
New  York,  carried  her  crew  of  fifteen  men  and  boys  safely  to 
Canton  and  back,  despite  the  perils  of  the  sea  and  of  pirates. 

QUESTIONS  AND  TOPICS 

1.  Name  another  country  in  which  transportation  was  easier  in 
winter  than  in  summer,  before  the  introduction  of  railroads. 

2.  History  of  the  navigation  of  the  Connecticut  River.    [W.  D.  Love, 
Proc.  Amer.  Antiq.  Society,  April,  1903,  reprinted  Worcester,  1903.] 

3.  Write  an  essay  on  the  economic,  social,  and  political  importance  of 
the  country  store,  in  the  past  and  present. 

4.  Write  a  biographical  sketch  of  one  of  the  business  men  named  in 
section  582.     QPoole's    Index  and  continuations;    current  biographical 
dictionaries.] 

5.  What  is  now  the  interstate  commerce  of  the  State  in  which  you 
live?    To  what  States  does  it  export  its  products,  what  products  of  other 
States  does  it  import?    How  does  its  commerce  with  other  States  com- 
pare with  its  foreign  commerce  in  bulk  and  value?     [Ask.  questions  of 
railroad  and  steamship  men;   visit  freight  yards.] 

6.  Comparing  the  figures  of  sect.  584  with  the  figures  for  total  ex- 
ports, sect.  561,  what  do  you  guess  formed  the  bulk  of  the  exports  from 
each  State  or  port? 

7.  Write  a  brief  commercial  history  of  one  of  the  cities  named.    CLocal 
histories;    Encyc.;    commercial  cyclopedias.] 

8.  Episodes  of  Boston  commerce.    [M.  A.  D.  Howe,  Atlantic  Monthly, 
1903,  91:  175-184.] 

9.  Prepare  and  study  a  graphic  chart,  sect.  586,  and  preserve  it  for 
comparison  with  later  conditions. 

10.  The  African  slave  trade.    [Weeden,  chap.  12;   Abbot,  chap.  3.] 

11.  What  reasons  occur  to  you  why  the  Americans  should  have 
traded  with  England  so  much  more  than  with  other  states  of  Europe? 

12.  History  of  the  commerce  of  the  colonies  with  the  West  Indies. 
P?itman;  Weeden  or  Bruce,  Index,  West  Indies.] 


INTERNAL  TRADE  AND  FOREIGN  COMMERCE      497 

13.  Character  of  production  and  commerce  in  the  West  Indies  at 
this  time.     [Pitman;    Fiske.] 

14.  History  of  ship-building  in  the  colonies.     [Weeden,  252-267, 
573-581;   Wright,  23-42;   Marvin,  chaps.  1,  2.] 

15.  Pirates  and  privateers  of  the  colonial  period.    [Weeden,  chap.  9, 
559-565;   Abbot,  chap.  5,  Howard  Pyle,  The  buccaneers. 3 

BIBLIOGRAPHY 

See  preceding  chapter. 


COMMERCE  AND  POLICY,   1789-1815 

594.  Importance  of  commercial  policy  in  this  period.  —  The 

two  preceding  chapters  have  described  the  conditions  of  com- 
merce in  the  United  States  about  1789,  with  but  an  occasional 
reference  to  the  influence  which  governments  exercised  in 
directing  and  restricting  the  movement  of  wares.  In  every 
period  governments  interfere  with  the  free  exchange  of  com- 
modities, that  the  interests  of  the  people  as  a  whole  may  not 
suffer  from  the  selfishness  of  individual  merchants.  In  the 
period  under  consideration,  lasting  through  the  second  war 
with  England,  the  influence  of  governments  on  the  fortunes 
of  our  foreign  trade  was  more  pronounced  than  it  has  ever 
been  in  later  times;  and  the  topic  of  commercial  policy  must 
occupy  the  leading  place  in  this  present  chapter. 

595.  Questions  of  policy.  —  The  Revolution  of  1776,  by 
which  a  group  of  English  colonies  was  transformed  into  an 
independent    state,    claiming    to    rank    as    England's    equal, 
shocked  the  ideas  of  European  statesmen  to  an  extent  which 
we  can  hardly  conceive.    There  was  no  place  in  the  political 
system  of  the  time  for  an  independent  American  state.     For 
centuries  the  states  of  Europe  had  been  the  sole  source  of 
active  political  and  commercial  power;  in  other  continents  were 
to  be  found  only  semi-civilized  states,  subject  to  European 
influence,   and  colonies,  under  the  complete  control  of  the 
mother  countries.     Each  European  state  had  regulated  as  it 
pleased  the  commercial  relations  of  its  colonies  with  the  mother 
country,  with  other  European  countries,  and  with  their  colonies, 
Now  that  the  United  States  had  won  its  political  independenca 

498 


COMMERCE  AND  POLICY,   1789-1815  499 

was  it  to  be  treated  by  England  as  though  it  was  still  an  English 
colony,  and  given  its  former  privileges  though  it  was  no  longer 
subject  to  the  former  restrictions?  Were  other  European  states 
to  welcome  its  commerce,  now  that  England  could  no  longer 
prevent,  or  were  they  to  treat  it  like  a  European  state,  and 
restrict  its  trade  with  themselves  and  with  their  colonies? 
Finally,  what  attitude  was  the  United  States  itself  to  adopt, 
now  that  it  could  frame  its  policy  as  it  pleased?  These  were 
among  the  serious  problems  that  perplexed  the  statesmen  of 
the  Old  and  New  Worlds,  as  the  success  of  the  American 
Revolution  became  assured. 

596.  Policy  of  England.  —  Reference  has  been  made  in  a 
previous  paragraph  to  the  striking  fact  that  the  colonists  had 
no  sooner  won  the  war  of  independence  than  they  returned  to 
an  active  commerce  with  the  country  against  which  they  had 
been  fighting.  Comparing  the  six  years  preceding  the  Revo- 
lution with  the  six  years  following  the  treaty  of  peace  (1783), 
we  find  that  the  volume  of  trade  between  the  United  States 
and  England  was  substantially  the  same.  The  American 
people  suffered  during  the  war  for  lack  of  the  manufactures 
which  they  had  been  accustomed  to  purchase  from  England, 
and  which  they  found  then  could  be  purchased  to  such  advan- 
tage nowhere  else;  and  as  soon  as  peace  permitted  they  began 
eagerly  to  buy  English  products  again.  For  a  moment  it 
appeared  that  England  was  ready  to  welcome  this  trade;  the 
English  statesman,  Pitt,  introduced  a  bill  which  aimed  to 
encourage  the  American  trade  not  only  with  England  but 
also  with  her  colonies.  Such  a  policy  implied  too  serious  a 
breach  in  the  old  system,  and  was  not  carried  into  effect. 
The  Americans  were,  indeed,  permitted  and  encouraged  to 
trade  still  with  England;  that  country  could  not  afford  to  give 
up  the  growing  market  for  its  manufactures  which  the  United 
States  afforded.  The  ports  of  the  West  Indies,  however,  were 
closed  to  American  merchants;  the  Americans  were  to  be 
punished  for  their  insubordination  by  exclusion  from  a  branch 
of  commerce  which  was  to  them  of  the  first  importance. 


500  A  HISTORY  OF  COMMERCE 

597.  Policy  of  France  and  other  states.  —  The  Americans 
learned,  not  only  from  England  but  also  from  other  European 
powers,  that  an  independent  state  must  shift  for  itself  and 
could  hope  for  no   commercial  favors.     They  might  fairly 
suppose  that  the  countries  which  had  joined  in  their  war 
against  England  (France,  Spain,  the  Netherlands)  would  take 
advantage  of  the  successful  issue  of  the  conflict  to  seek  to 
secure  the  American  trade  which  England  had  hitherto  monop- 
olized.    They  found,  indeed,  that  these  and  other  countries 
were  willing  to  sell  their  goods  to  the  United  States;  but  still 
these  countries  were  reluctant  to  take  in  exchange  American 
wares  for  which  they  felt  no  special  need,  and  were  most 
reluctant  to  open  the  trade  of  their  colonies  to  people  of  any 
nationality  but  their  own.    John  Adams  might  say  of  France 
in  1780,  "All  the  world  will  allow  the  flourishing  state  of  her 
marine  and  commerce,  and  the  decisive  influence  of  her  councils 
and  negotiations,  to  be  owing  to  her  new  connections  with  the 
United  States" ;  whatever  truth  there  might  be  in  the  statement, 
France  certainly  refused  to  express  her  gratitude  by  the  grant 
of  commercial  privileges.     France  found,  actually,  that  after 
the  return  of  peace  the  Americans  ceased  to  buy  her  manu- 
factures, and  flocked  for  trade  to  the  English  markets.    French 
merchants  complained  that  none  of  them  ever  gained  in  com- 
merce with  the  United  States:   when  all  the  best  part  of  the 
American  custom  went  to  English  merchants,   why  should 
France  or  any  other  country  on  the  Continent  relax  the  re« 
strictions  which  were  designed  to  protect  the  home  market 
and  the  colonial  market  for  the  benefit  of  natives? 

598.  Conditions  of  American  trade  with  Europe  in  1789.  — 
In  spite  of  the  unfavorable  attitude  of  the  powers  which  con- 
trolled the  great  markets  of  the  world,  the  United  States 
maintained  a  considerable  commerce,  as  was  shown  by  the 
descriptions  of  previous  chapters.    This  commerce  was,  how- 
ever, carried  on  under  serious  disadvantages.    Reviewing  the 
staple  exports  of  the  country  we  find  that  breadstuffs  wer& 
generally  subject  to  prohibitory  duties  in  England,  and  that 


COMMERCE  AND  POLICY,   1789-1815  501 

fish  and  salt  provisions  were  actually  prohibited  in  England, 
and  were  heavily  dutied  in  France.  The  southern  staples 
fared  little  better,  for  they  competed  with  the  products  of 
European  colonies  even  though  they  did  not  threaten  European 
industries.  Tobacco  and  rice  were  subject  either  to  actual 
prohibitions  or  to  heavy  duties  in  most  of  the  important 
European  markets. 

599.  Conditions  of  trade  with  the  West  Indies.  —  Conditions 
of  trade  with  the  West  Indies  were  even  worse.     Spain  and 
Portugal  absolutely  forbade  all  direct  intercourse  with  their 
colonial  possessions;  and  wares  destined  for  their  colonies  had 
either  to  be  carried  by  smugglers  or  else  exported  to  Europe 
and  then  re-exported  in  ships  of  the  mother  country.    England 
closed  her  possessions  on  the  American  mainland  completely, 
and  while,  as  a  temporary  favor,  she  admitted  some  wares  to 
her  West  India  coloDies,  by  proclamations  renewed  from  year 
to  year,  she  prohibited  salt  provisions  and  fish,  and  excluded 
American  ships  from  the  trade.    Her  vessels  alone  could  take 
our  produce  and  bring  back  the  molasses,  sugar,  etc.,  which 
formed  the  objects  of  the  return  trade.     The  French  West 
Indies,  also,  were  open  to  us  only  as  a  temporary  concession, 
and  in  them  and  in  the  colonial  possessions  of  other  powers 
the  trade  was  burdened  with  duties. 

600.  Weakness  of  the  United  States  at  this  time.  —  These 
were  by  no  means  all  the  hardships  under  which  American 
commerce  labored  at  this  time.     The  government  was  too 
young  and  weak  to  furnish  adequate  protection  to  ships  flying 
the  American  flag  in  foreign  waters  and  on  the  high  seas,  and 
it  had  as  yet  obtained  no  guarantee  that  American  fishermen 
would  be  allowed  to  pursue  their  calling  as  before  the  Revolu- 
tion.   Furthermore,  the  attention  of  American  statesmen  was 
distracted  by  the  need  of  getting  the  machinery  of  the  new 
government  in  running  order,  and  by  the  serious  fiscal  difficul- 
ties which  pressed  for  settlement.    These  were  the  dark  days 
of  American  commerce.     From  the  lofty  position  which  the 
United  States  has  reached  to-day,  courted  for  its  commerce 


502 


A  HISTORY  OF  COMMERCE 


and  its  political  influence  by  other  great  powers  of  the  world, 
it  is  hard  to  realize  how  humble  was  our  national  position  in 
1789,  and  how  precarious  seemed  our  commercial  future. 

601.  Survey  of  American  commerce,  1789-1815.  —  Starting 
from  these  beginnings  we  have  now  to  trace  the  course  of  our 
commerce  through  the  period.  So  sharp  were  the  fluctuations 
in  this  early  stage  that  I  give  the  annual  statistics,  and,  for 
reasons  which  will  be  apparent  later,  call  particular  attention 
to  the  distinction  between  domestic  exports,  of  articles  pro- 
duced in  the  United  States,  and  foreign  exports,  of  articles 
brought  from  some  other  country  and  re-exported.  No  exact 
figures  for  the  imports  of  this  period  can  be  given,  but  it  is 
safe  to  say  that  the  value  of  the  imports  did  not  diverge  greatly 
from  the  value  of  the  exports. 

EXPORTS  OF  THE  UNITED  STATES,  IN  MILLIONS  OF  DOLLARS 
(Fiscal  years,  ending  Sept.  30  of  the  date  given) 


Domestic 

Foreign 

Total 

Domestic 

Foreign 

Total 

1790 





20.4 

1804 

41.4 

36.2 

77.6 

1791 





19.0 

1805 

42.3 

53.1 

95.5 

1  7Q9 

on  7 

Iftftfi 

41    9 

fin  9 

me 

If  tU 

1793 





—  *  /  .  i 
26.1 

J.OV/U 

1807 

t  i  .  >-• 

48.6 

DU.  — 

59.6 

.  O 

108.3 

1794 





33.0 

1808 

9.4 

12.9 

22.4 

1795 



47.9 

1809 

31.4 

20.7 

.52.2 

1796 

40.7 

26.3 

67.0 

1810 

42.3 

24.3 

66.7 

1797 

29.8 

27.0 

56.8 

1811 

45.2 

16.0 

61.3 

1798 

28.5 

33.0 

61.5 

1812 

30.0 

8.4 

38.5 

1799 

33.1 

45.5 

78.6 

1813 

25.0 

2.8 

27.8 

1800 

31.8 

39.1 

70.9 

1814 

6.7 

0.1 

6.9 

1801 

47.4 

46.6 

94.1 

1815 

45.9 

6.5 

52.5 

1802 

36.7 

35.7 

72.4 

1816 

64.7 

17.1 

81.9 

1803 

42.2 

13.5 

55.8 

1817 

68.3 

19.3 

87.6 

602.  Fluctuations  in  the  export  trade;  share  of  domestic 
and  of  foreign  exports.  —  If  the  reader  will  cast  his  eye  down 
the  column  of  totals  he  will  appreciate  at  once  the  unsteadiness 


COMMERCE  AND  POLICY,  1789-1815  503 

of  our  trade  during  the  period  under  consideration.  For  a 
few  years  the  figure  of  exports  was  almost  constant.  Then, 
in  1793,  began  a  rapid  rise;  the  export  trade  doubled,  tripled, 
more  than  quadrupled.  A  check  to  this  growth  was  apparent 
in  the  few  years  after  1801,  but  it  began  again,  and  the  figures 
of  exports  reached  their  highest  point  in  the  years  1806  and 
1807.  They  had  grown  more  than  fivefold  in  fifteen  years. 
The  year  of  1808  showed  a  precipitous  decline,  and,  after  an 
interval  of  partial  recovery,  the  figures  reached  their  lowest 
point  in  1814.  At  the  close  of  the  period  prospects  seemed 
brighter. 

Returning  to  the  table,  to  analyze  the  part  borne  in  the 
changes  by  domestic  and  by  foreign  exports  respectively,  we 
find  that  the  foreign  exports  were  chiefly  responsible  for  the 
great  fluctuations.  No  figures  can  be  given  for  the  earlier 
years,  but  it  can  be  stated  with  assurance  that  of  the  total 
exports  in  1790  only  an  insignificant  fraction,  probably  much 
less  than  one  million,  was  composed  of  the  products  of  other 
countries.  There  had  been  a  tremendous  gain,  therefore,  in 
this  branch  of  our  trade,  before  1796,  and  it  proved  capable 
of  great  expansion  afterwards,  while,  on  the  other  hand,  it 
declined  in  one  year  almost  to  nothing.  Domestic  exports, 
also,  showed  a  great  increase  in  the  early  years  of  the  table, 
but  they  soon  came  near  to  the  limit  of  their  expansion,  and 
hovered  generally  about  the  figure  of  forty  millions;  the  table 
shows,  moreover,  that  they  resisted  depressing  influences  better 
than  the  foreign  exports. 

603.  Varying  fortunes  of  foreign  trade  not  explained  by 
conditions  at  home.  —  The  reasons  for  the  growth  of  American 
trade  after  1790  are  to  be  sought  mainly  in  conditions  abroad. 
There  was  no  development  of  resources  at  home  sufficient  to 
account  for  the  great  expansion  of  trade.  The  United  States, 
it  is  true,  gained  a  new  export  product  in  cotton,  which  was 
shipped  in  rapidly  increasing  quantities  after  the  invention  of 
the  cotton-gin  in  1793.  Cotton  took  the  first  place  among 
southern  exports  after  1800,  and  the  extension  of  the  cotton 


504  A.   HISTORY  OF  COMMERCE 

culture  helps  to  explain  the  growth  of  domestic  exports.  Still 
cotton  did  not  rise  to  the  position  of  king  among  exports  until 
the  following  period,  and  the  description  of  the  rise  of  the 
cotton  trade  will  be  referred  to  a  later  chapter. 

We  cannot  give  American  statesmen  the  credit  for  removing 
the  restrictions  on  our  commerce,  described  above,  and  so 
enabling  it  to  expand  uncramped.  In  spite  of  all  their  persist- 
ence and  ingenuity  they  secured  only  slight  and  partial  con- 
cessions. The  treaty  with  England,  negotiated  by  John  Jay 
in  1794,  removed  some  of  our  grievances,  but  proposed  to  open 
the  West  India  trade  on  such  humiliating  conditions  that  the 
offer  was  indignantly  refused.  A  treaty  with  Spain  gave  us 
merely  the  right  to  navigate  the  lower  Mississippi  River, 
without  other  commercial  privileges;  and  even  the  acquisition 
of  Louisiana,  in  1803,  had  but  an  inconsiderable  effect  on  our 
commerce  at  the  time. 

604.  Conditions  abroad;  effect  of  the  European  wars  on 
domestic  exports.  —  We  owed  our  rapid  commercial  growth 
not  to  our  own  strength,  and  not  to  the  favor  of  European 
states;  we  owed  it  to  the  necessities  of  the  position  in  which 
the  countries  of  Europe  found  themselves  after  the  outbreak 
of  the  wars  following  the  French  Revolution.  These  wars  were 
of  decisive  importance  to  our  commerce  in  two  ways.  In  the 
first  place  they  caused  an  immense  increase  in  the  demand  for 
our  foodstuffs.  When  the  states  of  Europe  were  fighting  for 
their  very  existence  they  could  not  afford  to  uphold  the  prin- 
ciples of  their  former  protective  policy,  and  welcomed  the  means 
of  subsistence,  from  whatever  source  they  might  come.  The 
withdrawal  of  men  from  agriculture  to  serve  in  the  armies 
diminished  the  supply  of  food  in  Europe  and  called  for  large 
exports  from  the  United  States,  for  which  high  prices  were 
paid.  Taking  for  illustration  the  little  country  of  Portugal, 
we  find  that  our  exports  to  that  country  increased  about  ten- 
fold in  the  course  of  the  period,  being  especially  large  in  the 
years  from  1810  to  1813.  These  years  mark  the  time  when 
the  Peninsular  War  was  at  its  height,  and  when  the  large  armies 


COMMERCE  AND  POLICY,   1789-1815  505 

quartered  in  the  country  demanded  a  supply  of  food  which 
could  not  possibly  be  met  from  native  sources. 

605.  Effect  on  foreign  exports  and  the  carrying  trade.  — • 
The  European  wars  were  not  only  responsible  for  a  great  gain 
in  our  domestic  exports;   they  were  the  sole  cause  of  the  tre- 
mendous increase  in  the .  foreign  exports,   which  figured  so 
largely  in  our  commerce  at  this  period.     The  wars  involved 
most  of  the  important  states  of  Europe.     A  ship   flying  the 
flag  of  France  or  of  any  of  her  allies  was  constantly  exposed 
to  capture  by  British  cruisers ;  a  ship  flying  the  flag  of  Great 
Britain  or  of  one  of  her  allies  was  a  fair  prize  for  the  French 
privateers  which  swarmed  over  the  seas.    In  the  great  conflict 
there  was  but  one  country,  with  an  extensive  merchant  marine, 
which   managed   to   maintain   neutrality,    and   this   was   the 
United  States.     The  carrying  trade  of  the  world  fell  into  our 
hands.    The  countries  of  Europe,  forced  by  the  exigencies  of 
war,  gave  up  the  cherished  principles  of  their  colonial  policy, 
and  threw  open  the  trade  with  their  colonies  and  themselves. 
The  rights  of  neutral  states  in  time  of  war  were,  it  is  true, 
still  unsettled.     American  ship  captains  and  merchants  were 
subject  to  arbitrary  and  humiliating  interference  on  the  part 
of  the  belligerents.    In  the  early  part  of  the  war,  however, 
the  results  of  this  interference  were  of  sentimental  rather  than 
of  practical  importance,  and  means  were  found  to  evade  the 
restrictions  which  the  belligerents  imposed.     When  England 
forbade  all  trade  between  her    enemies  (France,   Spain,   the 
Netherlands)  and  their  colonies,  American  skippers  did  not 
sail  direct  from  the  West  Indies  to  Europe,  but  touched  at 
some  port  of  the  United  States,  entered  the  cargo  for  import, 
and  sometimes  actually  landed  it.     It  was  not  meant  for 
consumption  in  this  country  and  was  soon  withdrawn  and 
exported  to  its  destination  in  Europe,  as  though  it  were  com- 
posed of  domestic  products. 

606.  Prosperity  of  American  commerce  and  shipping.  — 
The  European  wars,  therefore,  introduced  American  commerce 
to  a  new  era  of  prosperity.    "No  one  was  limited  to  any  one 


506  A   HISTORY  OF  COMMERCE 

branch  of  trade;  the  same  individual  was  concerned  in  voyages 
to  Asia,  South  America,  the  West  Indies,  and  Europe."  Our 
ships  gathered  the  products  of  distant  countries,  coffee,  sugar, 
tea,  pepper,  etc.,  and  purveyed  them  to  the  people  of  Europe. 
In  many  years  the  value  of  foreign  exports  exceeded  that  of 
domestic  exports;  in  1806  it  was. half  as  large  again.  The 
reader  will  better  appreciate  the  contrast  with  present  condi- 
tions when  he  learns  that  in  1914  the  foreign  exports  of  the 
country  amounted  only  to  one  sixty-seventh  part  of  the 
domestic. 

The  merchant  marine  of  the  United  States  grew  rapidly 
under  these  favoring  conditions,  and  in  spite  of  complaints  that 
former  conditions  had  been  reversed,  and  that  ships  could  be 
built  cheaper  abroad  than  at  home.  The  national  tonnage 
engaged  in  foreign  trade,  which  in  1789  appeared  to  be  not 
much  in  excess  of  100,000,  exceeded  500,000  in  1795,  and 
900,000  in  1810.  The  proportion  of  American  ships  in  the 
total  of  those  entering  the  ports  of  the  United  States  grew 
correspondingly;  and  the  merchant  tonnage  of  the  United 
States  was  second  only  to  that  of  Great  Britain  and  superior 
to  that  of  any  other  country  in  the  world. 

607.  Checks  to  prosperity  after  1800.  —  The  check  on  the 
growth  of  our  commerce  apparent  in  the  figures  for  the  few 
years  after  1801  is  explained  by  the  conclusion  of  a  peace 
between  the  states  of  Europe,  which  lasted  from  1801  to  1803. 
Had  the  peace  proved  permanent  there  would  have  been, 
without  doubt,  a  further  decline  in  American  commerce,  as 
the  European  countries  resumed  their  former  commercial  rela- 
tions. With  the  reopening  of  war,  however,  the  Americans 
enjoyed  the  advantages  of  their  previous  position;  the  exports 
of  1806  and  1807  exceeded  a  hundred  millions  in  value,  and 
marked  a  height  which  exports  did  not  again  reach  for  nearly 
twenty  years.  Our  commercial  prosperity  at  this  time  was 
very  precarious.  It  was  the  period  in  which  Napoleon  and 
England  were  waging  war  over  the  Continental  System,  as 
described  in  a  previous  chapter.  Each  belligerent  looked  on 


COMMERCE  AND   POLICY,   1789-1815  507 

the  neutral  carrier  now  not  as  a  source  of  gain  to  itself  so 
much  as  a  source  of  help  to  the  enemy,  and  determined  to 
restrict  neutral  trade,  even  though  it  were  necessary  to  destroy 
it.  In  the  period  between  1803  and  1812  some  1,500  American 
ships  were  seized  in  Europe,  and  the  greater  part  of  them 
condemned,  for  violating  the  restrictions  then  carried  into 
effect.  The  best  sailors  were  impressed  from  American  ships 
to  fight  the  battles  of  England.  American  shipping  was 
involved  in  an  unequal  struggle. 

608.  Decline  of  commerce ;  embargo  and  war.  —  The  United 
States  was  not  prepared  to  enforce  by  arms  the  rights  which 
it  claimed  for  its  merchants  and  sailors.     The  government 
shrank  from  war,  and  adopted  instead  the  policy  of  commercial 
restriction,  hoping  to  bring  the  European  powers  to  terms  by 
refusing  to  trade  with  them  until  they  reformed  their  conduct. 
A  short  trial  was  made  with  an  act  forbidding  the  importation 
of  English  manufactures,  and  in  December,  1807,  a  general 
embargo  was  laid  on  all  vessels,  forbidding  them  to  leave  port 
for  a  foreign  country.     The  embargo  was  evaded  in  various 
ways,  but  its  effect  on  our  foreign  commerce  and  export  indus- 
tries was  disastrous,   and  forced  the  substitution  of  milder 
measures  in  February,   1809.     Our  commerce,  now  suffering 
both  from  the  attacks  of  its  enemies  abroad  and  the  restrictions 
of  its  friends  at  home,  could  not  recover  the  position  which  it 
had  reached  before  the  embargo,  and  declined  still  further 
after  the  declaration  of  war  with  England,  to  which  we  were 
finally  forced  in  June,  1812. 

609.  Effect  of  the  decline  of  commerce  on  the  development 
of  American  manufactures.  —  While  the  people  maintained  an 
active  commerce  with  Europe  they  obtained  most  of  their 
manufactured  wares  from  that  source,  as  they  had  done  in 
colonial  times.     The  interruptions  of  commerce  due  to  acts 
like  the  embargo  and  to  the  war  with  England  cut  them  off 
from  this  source  of  supply,  and  home  manufactures  grew  up 
as  commerce  declined.     The  letters  of  Jefferson,  written  at 
this  period,  contain  many  references  to  the  growth  of  manu- 


508  A   HISTORY  OF  COMMERCE 

factures  in  his  State,  Virginia,  and  in  other  parts  of  the  country, 
especially  in  New  England,  the  development  of  a  native  manu- 
facturing industry  was  even  more  marked.  American  manu- 
factures began,  in  this  period,  to  outgrow  the  simple  forms 
of  domestic  industry,  and  to  attract  the  capital  necessary  for 
the  establishment  of  regular  factories.  Many  companies  were 
incorporated  to  manufacture  goods  by  means  of  power  ma- 
chinery, and  industrial  methods  which  had  long  been  practised 
in  England  were  now  first  introduced  in  this  country  on  an 
extensive  scale.  The  development  of  the  textile  industries 
was  especially  rapid.  It  was  estimated  that  in  1800  the  cotton 
factories  of  the  country  had  consumed  only  500  bales  of  raw 
material,  while  in  1810  the  number  had  risen  to  10,000  and 
in  1815  to  90,000.  A  cotton  factory  established  by  Francis 
C.  Lowell  at  Waltham,  Mass.,  in  1814,  is  said  to  have  been  the 
first  in  the  world  in  which  all  the  processes  involved  in  the 
manufacture  of  goods,  from  the  raw  material  to  the  finished 
product,  were  carried  on  in  one  establishment,  under  a  carefully 
studied  system. 

610.  Considerations  determining  early  tariff  policy.  —  The 
development  of  manufactures  at  this  time  gave  rise,  in  the 
following  period,  to  a  demand  for  protection  which  marks  a 
turning-point  in  the  tariff  history  of  the  country.  When  the 
first  national  tariff  was  adopted,  at  the  founding  of  the  Federal 
government  in  1789,  the  legislators  had  a  difficult  problem  of 
policy  to  solve.  They  found  the  commerce  of  the  country 
fenced  in  by  foreign  tariffs  composed  of  high  duties  and  of 
.  some  actual  prohibitions.  They  desired  the  reduction  of  these 
duties  that  American  commerce  might  expand.  Many  of  them 
expressed  their  belief  in  a  policy  of  retaliation,  if  no  other 
means  availed  to  secure  the  reduction.  At  this  time,  however, 
the  commercial  position  of  the  country  was  not  strong  enough 
to  permit  the  tariff  to  be  used  as  a  weapon  with  which  to 
menace  foreign  states.  Other  countries  showed  but  a  languid 
desire  for  the  products  which  were  then  our  staple  exports, 
and  we  had  great  need  of  the  foreign  wares  composing  our 


COMMERCE  AND  POLICY,   1798-1815  509 

imports.  We  could  not  afford  even  to  discriminate  against 
the  importation  of  manufactured  goods,  with  an  idea  of  pro- 
tecting native  manufactures;  our  manufactures  were  .then  so 
weak  that  a  policy  of  high  protection,  to  exclude  foreign 
wares,  would  have  caused  serious  distress  to  the  consumers 
at  home. 

611.  Survey  of  tariff  policy.  —  Barred  by  these  considera- 
tions from  a  tariff  of  high  duties,  the  legislators  framed  the 
first  tariff  mainly  as  a  revenue  measure.  Comparatively  few 
articles  were  placed  upon  the  free  list,  duties  being  levied  on 
articles  like  tea  and  coffee  as  well  as  on  manufactured  wares, 
which  might  possibly  be  produced  at  home.  The  general  scale 
of  duties  was  much  lower  than  in  foreign  countries  at  the  time, 
or  in  the  United  States  later;  it  was  estimated  that  an  assorted 
cargo  paid  about  1\  per  cent.  Of  the  results  of  the  first  tariff 
a  recent  investigator  says:  "The  most  careful  examination 
fails  to  show  that  it  affected  the  volume,  variety,  or  direction 
of  our  foreign  trade  in  the  slightest  degree."  In  the  course  of 
the  period  the  tariff  was  frequently  amended,  and  rates  were 
raised  considerably;  but  the  tariff  continued  to  be  used  chiefly 
as  a  source  of  revenue,  and  was  not  seriously  affected  by 
protectionist  ideas  until  after  1815. 

QUESTIONS  AND  TOPICS 

1.  Prepare  yourself  for  studying  the  policy  of  this  period  by  mentally 
reviewing  the  present  commercial  policy.     Does  the  government  now 
encourage  or  discourage  exports  or  imports?    Does  it  grant  favors  to  one 
foreign  country  over  another?     Do  foreign  countries  prohibit  or  restrict 
trade  with  their  dependencies?    What  is  the  present  policy  of  this  and 
other  countries  with  respect  to  shipping? 

2.  When  England  excluded  the  United  States  from  trade  with  the 
West  Indies,  what  classes  would  be  hurt,  what  classes  would  be  helped,  in 
England,  in  the  West  Indies,  and  in  the  United  States? 

3.  Indicate  on  a  rough  sketch  map  the  markets  wholly  or  partially 
closed  to  American  commerce  about  1789. 

4.  Financial,  military,  and  naval  weakness  of  the  United  States  in 
1789.     [Manuals  and  standard  works  on  U.  S.  History.] 

5.  Make  a  chart  first  of  the  figures  of  total  exports  in  sect.  601;  then 


510  A  HISTORY  OF  COMMERCE 

indicate  the  relative  share  of  foreign  and  domestic  exports.  Leave  room 
at  the  top  or  bottom,  where  the  dates  are  written,  to  write  in  the  chief 
historical  events  affecting  the  course  of  commerce  in  the  period. 

6.  It  has  been  generally  believed  that  the  adoption  of  the  Federal 
Constitution  led  .to  a  great  growth  in  business  and  prosperity.     Prof. 
G.  S.  Callender  has  suggested  that  the  growth  of  prosperity,  due  to  in- 
fluences acting  from  outside  America,  caused,  on  the  contrary,  the  Consti- 
tution to  be  popular  and  successful.    What  facts  support  this  latter  view? 

7.  Prepare  a  list  of  the  dates  showing  the  beginning  and  spread  of 
the  European  wars,  and  insert  on  the  chart  as  suggested  above. 

8.  Study  the  relative  importance  of  foreign  exports  to  total  exports 
in  the  last  half  of  the  century,  as  a  contrast  to  conditions  about  1800. 
[U.  S.  Statistical  Abstract,  Index,  Exports,  merchandise,  total  values.] 

9.  Expansion  of  the  merchant  marine,  1789-1800.  [Marvin,  chap.  4.] 

10.  Grievances  of  neutral  carriers,  leading  to  the  second  war  with 
England.    [Marvin,  chap.  7;  Coman,  171-180;  McMaster,  Hist.] 

11.  The  Embargo.    [Manuals  of  U.  S.  history;   references  in  Chan- 
ning  and  Hart.] 

12.  Rise  of  manufacturing  industry.     [Coman,   180-193;    Wright, 
117-131.] 

13.  Considerations  determining  the  earlier  commercial  policy.    [Page; 
see  above,  chap,  xlv.] 

BIBLIOGRAPHY 

See  chapter  xlv  for  general  works;  Henry  Adams,  *  History,  N.  Y., 
1889-91,  covering  the  period  1800-1817  in  nine  volumes,  is  the  most  com- 
plete general  narrative.  Mahan,  **  War  of  1812,  Boston,  Little,  2  vols., 
is  now  by  far  the  best  special  account.  Ralph  D.  Paine,  The  fight  for  a 
free  sea,  New  Haven,  1920,  is  an  interesting  description.  The  commercial 
statistics  of  the  period  may  be  found  elaborated  in  Adam  Seybert,  *  Statis- 
tical annals,  Phila.,  1818,  or  in  Timothy  Pitkin,  *  Statistical  view,  New 
Haven,  1817,  2d  ed.,  1835 


CHAPTER   XLVIII 
NATIONAL  EXPANSION,   1815-1860 

612.  Survey  of  commerce,  1815-1860.  —  In  contrast  with 
the  period  ending  in  1815,  the  next  period  which  we  study, 
extending  from  1815  to  1860,  was  marked  by  the  slowness  and 
the  comparative  steadiness  in  the  growth  of  foreign  commerce. 
An  indication  of  the  course  of  trade  in  this  period  is  given  by 
the  following  table,  in  which  the  figures  represent  millions  of 
dollars 


1820  

Imports 
74 

Exports 
69 

Total 
144 

1830  

62 

71 

134 

1840  

98 

123 

221 

1850  

173 

144 

317 

1860.  . 

353 

333 

687 

Though  the  statistics  of  selected  years  can  give  only  a 
rough  picture  of  commercial  development,  the  figures  here 
given  suggest  the  striking  features  of  our  trade  in  this  period 
with  sufficient  accuracy.  For  about  twenty  years  after  1815 
the  foreign  commerce  of  the  country  was  nearly  stationary, 
or  actually  declined.  Not  until  1835  did  our  exports  reach 
again  the  mark  attained  in  the  year  1807.  Towards  the  end 
of  the  period,  however,  they  showed  increasing  strength;  the 
figures  for  1860  show  the  upper  limit  which  they  attained,  but 
for  some  years  previously  they  had  been  approaching  the  sum 
of  three  hundred  millions. 

613.  Reasons  for  slowness  of  growth.  —  The  reasons  for 
these  changes  in  our  foreign  trade  must  be  sought  both  abroad 
and  at  home.  Our  prosperity  in  the  preceding  period  had 
been  due  mainly  to  the  European  wars.  With  the  return  of 
peace  the  states  of  Europe  escaped  from  their  commercial 

511 


512  A   HISTORY  OF  COMMERCE 

dependence  on  the  United  States.  Our  domestic  exports  of 
breadstuffs  and  provisions  declined  as  Europe  returned  to  the 
policy  of  protecting  the  domestic  food  supply;  and  our  foreign 
exports  declined  even  more  rapidly  when  we  lost  our  privileged 
position  of  the  great  neutral  carrier,  and  our  merchants  had 
to  face  not  only  the  active  competition  but  also  the  adverse 
legislation  of  other  countries.  Through  most  of  the  period 
the  annual  foreign  exports  of  the  country  were  about  twenty 
million  dollars  in  value.  Not  until  near  the  end  of  the  period 
did  conditions  change  to  our  advantage.  The  repeal  of  the 
English  Corn  Laws  in  1846,  as  was  noted  in  a  previous  chapter, 
marked  a  departure  in  commercial  policy,  which  offered  new 
openings  to  American  export  industries. 

614.  Absorption  of  the  national  energy  in  territorial  expan- 
sion.—  At  home,  moreover,  the  people  of  the  United  States 
were  occupied  in  this  period  with  tasks  which  turned  their 
thoughts  and  interests  to  a  large  extent  away  from  foreign 
trade.     It  was  a  period  of  great  territorial  expansion.     A 
comparison  of  maps  indicating  the  distribution  of  population 
shows  that  extraordinary  changes  occurred  in  the  interval 
between  1810  and  1860.    At  the  former  date  the  people  were 
still  gathered  mainly  along  the  Atlantic  seaboard,  face  to  face 
with  Europe;  and  most  of  the  territory  west  of  the  Appalachian 
mountains  was  still  left  to  the  Indians.    The  center  of  popula- 
tion was  not  far  from  Washington,  D.  C.     In  1860,  on  the 
other  hand,  the  center  of  population  was  near  Chillicothe,  Ohio. 
This  change  indicates  an  enormous  movement  of  population 
westward.     The  country  extending  west  to  the  Mississippi 
river  had,  by  1860, 'been  covered  almost  continuously  with 
settlements;   many  people  had  spread  out  on  the  great  plains 
facing  the  Rocky  Mountains;  and  the  population  on  the  Pacific 
Coast  was  sufficient  to  entitle  that  district  to  the  two  States 
California  and  Oregon. 

615.  Relative  decline  in  the  importance  of  foreign  trade.  — 
The  expansion  of  population,  necessary  as  it  was  to  the  develop- 
ment of  the  country,  proved  in  its  early  stages  to  contribute 


514  A  HISTORY  OF  COMMERCE 

comparatively  little  to  the  growth  of  foreign  commerce.  The 
growth  of  our  trade  did  not  keep  pace  with  the  growth  of 
population.  While  the  share  of  the  average  inhabitant  in 
foreign  trade  was  over  $30  in  1800,  it  was  little  over  $20  in 
1860,  and  ranged  between  $10  and  $15  through  much  of  the 
intervening  period. 

It  seems  as  if  the  people  of  the  country,  after  the  close  of 
the  war  of  1812,  had  turned  their  gaze  away  from  Europe, 
the  continent  which  they  had  for  centuries  regarded  as  the 
source  of  civilization,  and  had  fixed  their  attention  on  their 
own  continent,  with  the  determination  to  make  its  resources 
satisfy  their  needs,  so  far  as  they  were  able.  Many  of  the 
settlers  in  the  western  country  led  lives  of  extreme  simplicity, 
unable  to  find  a  market  for  the  surplus  which  the  fertile  soil 
returned  to  them,  and  consequently  forced  to  restrict  their 
purchases  of  foreign  goods  to  the  bare  minimum. 

616.  Importance  of  the  problem  of  transportation  in  this 
period.  • —  As   the  American   people  expanded   and   occupied 
territory  far  beyond  the  limits  of  their  original  settlements, 
the  question  of  transportation  became  one  of  increasing  im- 
portance.   The  early  colonists  had  evaded  rather  than  solved 
the  problem  of   transportation,  by  choosing    for  settlement 
districts  connected  with  the  sea  by  short  water  routes,  and 
by  renouncing,  in  large  part,  the  attempt  at  intercommunica- 
tion by  land.     The  problem  could  no  longer  be  set  aside,  as 
the  people  spread  out  in  the  great  interior  valley.    The  resources 
of  the  West  could  be  of  no  advantage  to  the  people  of  the 
East,  and  could  contribute  nothing  to  the  foreign  commerce 
of  the  country,  unless  means  were  found  to  bring  the  wares 
to  market  with  a  profit. 

In  the  remaining  sections  of  this  chapter,  therefore,  we  shall 
study  the  development  of  the  means  of  transportation  in  this 
period,  that  we  may  be  better  able  to  appreciate  the  details 
of  the  export  and  import  trade,  described  in  following  chapters. 

617.  The  turnpike  era.  —  Even  in  the  earlier  period,  follow- 
ing 1789,  the  condition  of  the  common  roads  was  felt  to  be 


NATIONAL  EXPANSION,   1815-1860  515 

intolerable,  and  a  movement  for  their  reform  set  in.  Stock 
companies  were  chartered,  to  improve  the  more  important 
roads,  and  were  allowed  to  secure  a  return  on  their  investment 
by  charging  toll  on  traffic  —  so  much  for  a  one-horse  cart,  so 
much  for  a  two-horse  wagon,  etc.  Hundreds  of  turnpike 
companies  were  chartered  in  the  different  States,  and  in  Penn- 
sylvania alone  over  2,000  miles  of  improved  roads  had  been 
constructed  by  them  at  the  close  of  the  first  quarter  of  the 
century. 

Until  better  means  of  transportation  were  provided  the 
turnpikes  were  important  channels  of  trade.  They  united  the 
districts  of  the  interior  with  the  coast  and  with  navigable 
rivers,  and  made  possible  throughout  the  year  a  freight  traffic 
which  formerly  had  been  restricted  to  the  sleighing  season.  A 
great  highway,  like  the  Mohawk  and  Hudson  turnpike,  running 
from  Schenectady  to  Albany,  was  studded  so  thickly  with 
taverns  that  the  traveler  was  never  out  of  sight  of  the  swinging 
sign-boards. 

618.  Failure  of  the  turnpikes  to  meet  the  country's  de- 
mands. —  The  success  of  the  turnpikes  stimulated  the  national 
government  to  construct  a  road  from  Cumberland,  on  the 
Potomac  River  in  the  western  part  of  Maryland,  to  Wheeling 
on  the  Ohio  River.  This  road  was  designed  to  furnish  the 
connection,  that  was  so  keenly  desired,  between  the  districts 
lying  on  either  side  of  the  mountains;  and  was  for  many  years 
an  important  route  for  passenger  travel.  The  expense  of  wagon 
transportation,  however,  prevented  a  great  growth  of  freight 
traffic  on  this  or  on  other  land  routes  of  considerable  length. 
The  cost  of  moving  freight  over  the  roads  of  this  period  has 
been  estimated  roughly  at  ten  cents  per  ton-mile,  and  this 
cost  prohibited  the  movement  of  ordinary  freight  to  a  great 
distance.  The  turnpike,  therefore,  did  not  solve  the  problem 
of  transportation  for  the  country,  and  turnpikes  declined  as 
better  means  of  transportation  were  brought  into  use.  About 
the  middle  of  the  century  the  idea  of  building  roads  of  wood 
took  strong  hold  of  the  minds  of  men,  and  plank  roads  were 


516  A  HISTORY  OF  COMMERCE 

constructed  with  great  vigor  for  a  few  years;    but  the  idea 
proved  impracticable  and  led  to  no  important  results. 

619.  Importance  of  the  western  waterways. — Vastly  more 
important  in  its  effects  on  the  internal  and  foreign  commerce 
of  the  country  was  the  development  of  the  means  of  water 
transportation.     Tt  has  been  said  of  North  America  that  no 
other  continent,  with  perhaps  the  exception  of  South  America, 
offers  such  excellent  natural  facilities  for  intercommunication 
as  is  furnished  by  the  system  of  rivers  and  lakes  lying  east  of 
the  Rocky  Mountains.     Early  in  the  history  of  our  western 
settlements  traders  used  the  rivers  flowing  into  the  Mississippi 
to  secure  connection  with  the  market  at  New  Orleans,  then 
under  Spanish  rule;   and  the  Louisiana  purchase  of  1803  gave 
the  United  States  control  of  the  river  route  from  source  to 
mouth.     A  line   of  packet   boats   plying  between  Pittsburg 
and  Cincinnati  was  started  in  1794,  and  many  flatboats  were 
employed  to  float  cargoes  down  the  Mississippi.     The  swift 
current  of  that  river,  however,  made  ascending  navigation 
difficult.    The  crews  of  the  flatboats  had  to  return  home  by 
land,  going  generally  on  foot  through  nearly  a  thousand  miles 
of  wilderness,  and  using  about  six  months  on  the  round  trip. 
The  stream  could  be  ascended  only  in  small  boats  propelled 
by  poles  and  sails.     Though  the  freight  rate  down  the  river 
was  as  low  as  one  cent  per  ton-mile,  the  charge  in  the  other 
direction  was  about  six  times  as  much.     The  need  of  some 
better  means  of  propelling  boats   against  the  current  was 
strongly  felt;  and  long  before  the  steamboat  had  been  made  a 
practical  success  the  prediction  was  common  that  it  would  be 
developed  to  serve  the  needs  of  commerce  on  our  western  rivers. 

620.  Invention  and  application  of  the  steamboat.  —  The 
steamboat,  like  many  other  instruments  of  technical  progress, 
was  not  the  invention  of  a  single  man,  but  was  developed  by 
contributions  from  several  different  sources.    Before  the  adop- 
tion of  the  Federal  Constitution  (1789)  Fitch  and  Rumsey  had 
constructed  steamboats  which  maintained  a  speed  of  four  to 
seven  miles  an  hour  against  the  current  of  the  Potomac  and 


NATIONAL  EXPANSION,   1815-186U 


517 


w    Navigable  by  Steamboat 
••-•  Navigable  by  Flatboat 
•  Not  navigable 


93°       Londtudt  Wort        8»°       from  Oramwlch        66° 


518  A  HISTORY  OF  COMMERCE 

Delaware  rivers;  and  these  successful  experiments  were  fol- 
lowed by  many  others  in  this  country  and  in  Europe.  Robert 
Fulton,  therefore,  scarcely  deserves  the  credit  commonly  ac- 
corded him  for  invention,  but  his  service  was  not  the  less  im- 
portant. He  combined  the  ideas  and  inventions  of  others,  and 
transferred  the  steamboat  from  the  sphere  of  technical  experi- 
ment to  that  of  practical  business  operation.  The  Clermont, 
which  started  from  New  York  August  7,  1807,  and  arrived  in 
Albany,  150  miles  distant,  in  32  hours,  was  the  first  steamboat 
in  the  world  which  maintained  a  regular  and  continuous  traffic 
in  the  public  service. 

621.  Development  of  river  transportation.  —  Within  a  few 
years  of  Fulton's  success  steamboats  were  introduced  on  the 
western  rivers,  and  after  an  interval  of  trial  proved  their 
capacity  for  meeting  the  conditions.  In  ten  years  (1817)  a 
steamboat  made  the  trip  from  New  Orleans  to  Louisville  in 
25  days  instead  of  the  three  months  consumed  by  barges; 
after  another  ten  years  (1827)  a  steamboat  made  the  trip  in 
little  over  a  week.  The  steamboats  did  more  at  first  to  reduce 
the  time  of  voyages  than  to  reduce  the  rates  of  transportation, 
but  the  cost  of  carriage  declined  gradually  as  the  means  of 
transportation  were  improved.  The  following  figures,  giving; 
the  number  of  steamboats  employed  on  the  rivers  of  the  West, 
show  how  rapidly  steam  navigation  increased  in  importance: 
1818,  20;  1829,  200;  1842,  450;  1848,  1,200.  Size  and  carry- 
ing capacity  were  growing  also,  and  it  is  said  that  in  1847  the 
steam  tonnage  of  the  Mississippi  Valley  exceeded  that  of  the 
whole  British  Empire.  "Pittsburg  city,  the  Pennsylvania 
great  western  emporium,"  as  it  was  styled  in  a  book  published 
in  1830,  grew  great  by  steamer  traffic,  and  other  cities,  as 
Cincinnati,  Louisville,  and  St.  Louis,  flourished  under  the 
same  influence.  The  most  obvious  effect  of  the  extension 
of  steam  navigation  was  the  growth  of  internal  trade,  especially 
that  between  North  and  South.  This  trade,  however,  was 
indirectly  of  great  importance  to  our  foreign  commerce,  for  it 
enabled  the  people  of  the  South  to  apply  themselves  almost 


NATIONAL  EXPANSION,   1815-1860  519 

exclusively  to  the  growth  of  export  products,   like  cotton, 
relying  on  other  parts  of  the  country  for  food  and  manufactures. 

622.  Demand  for  canals  in  this  period.  —  While  the  river 
system  offered  great  opportunities  for  developing  the  resources 
of  the  West,  it  was  necessarily  incomplete  in  the  connections 
it  afforded  with  other  parts  of  the  country.     It  left  gaps,  to 
be   filled  by  other  means  of  transportation,   between  three 
important  sections  of  country,  drained  respectively  by  the 
Mississippi  and  its  tributaries,  by  the  Great  Lakes,  and  by  the 
rivers  flowing  into  the  Atlantic.    The  need  of  bridging  these 
gaps  in  the  transportation  system  was  felt  acutely  in  the 
second  quarter  of  the  century,  as  population  spread  in  the 
interior  of  the  country,  and  was  first  met,  with  some  degree 
of  adequacy,  by  the  construction  of  canals. 

There  had  been  many  projects  for  canals  in  the  colonial 
period,  and  some  short  stretches  were  constructed  before  1800. 
People  contented  themselves  in  general,  however,  with  the 
natural  waterways,  and  sought  merely  to  regulate  their  channels 
and  to  regulate  the  flow  of  water  by  means  of  dams.  The  era 
of  activity  in  canal  construction  began  after  the  close  of  the 
second  war  with  England,  in  1815. 

623.  The  Erie  Canal   (1825),  and  others.  —  The  easiest 
route  by  which  a  canal  might  be  carried  through  the  Appa- 
lachian mountain  ridge  lay  in  the  State  of  New  York,  along 
the  valley  of  the  Mohawk  River.     The  advantages  of  this 
route  were  recognized  in  the  colonial  period,  and  the  advisa- 
bility of  utilizing  them  was  felt  especially  during  and  after 
the  war  of  1812,  when  the  political  danger  of  leaving  the  country 
without  means  of  intercommunication  became  apparent.    The 
construction  of  a  canal  along  this  route  was  begun  in  1817, 
and  in  1825  the  first  boat  passed  from  Lake  Erie  to  the  Hudson 
River.    Other  canals  were  constructed  to  connect  Lake  Cham- 
plain  and  Lake  Ontario  with  the  Erie  Canal,   and  further 
south,  in  New  Jersey  and  Pennsylvania  especially,  the  people 
entered  actively  into  the  work  of  canal  building. 

Further  west,  canals  were  constructed  to  unite  Lake  Erie 


520  A  HISTORY  OF  COMMERCE 

with  the  Ohio  River,  and  Lake  Michigan  with  the  Mississippi 
River  (1848),  and  just  before  the  close  of  the  period  which  we 
are  studying  the  St.  Mary's  Falls  Canal  (1855)  opened  the 
passage  from  Lake  Superior  to  the  other  lakes  to  boats  with  a 
draft  of  twelve  feet. 

624.  Commercial    benefit    of    the    canals.  —  The    canals 
effected  a  reduction  in  transportation  charges  which  placed 
trade  on  an  entirely  new  footing  along  the  lines  that  they  cov- 
ered.   In  contrast  with  the  cost  of  ten  cents  per  ton-mile,  on 
the  turnpikes,  we  find  a  cost  of  movement  of  about  one  cent, 
and  tolls  which  brought  the  total  charge  to  about  three  cents. 
The  tolls  varied  on  different  articles  and  were  not  the  same 
on  different  canals,  but  the  total  charges  represented  a  great 
saving  in  transportation  even  in  the  early  days  of  the  canals, 
and  tended  to  grow  less  with  the  passage  of  time.    The  crops 
which  grew  in  abundance  on  the  fertile  lands  of  western  New 
York  had  gone  begging  before  the  construction  of  the  Erie 
Canal,  and  the  inhabitants  had  been  able  to  purchase  few 
manufactured  or  foreign  articles.     A  letter  from  the  Genesee 
country  (east  of  Buffalo),  written  in  1799,  said  that  grain  was 
so  low  in  price  as  to  be  scarcely  worth  the  raising,  while  Euro- 
pean goods  were  very  dear;  it  took  the  produce  of  one  acre  to 
buy  a  pair  of  breeches.     Conditions  had  improved  somewhat 
before  1825,  with  the  extension  of  turnpikes  and  with  the 
increase  in  the  navigation  of  the  Susquehanna  River,  but  the 
Erie  Canal  brought  nevertheless  a  new  era  of  prosperity  to 
this  district,  and  first  made  its  rich  resources  available  for 
consumption  in  the  New  York  market  and  for  extensive  export. 

625.  Canals  less  important  than  rivers  for  distant  ship- 
ments. —  Important  as  were  the  canals,  their  influence  in  this 
period  was  local  rather  than  national.     Managers  were  slow 
to  adopt  the  practice  of  reducing  rates  on  a  long  haul,  to  stimu- 
late distant  traffic,  and  the  canals  served  mainly  local  needs. 
We  read,  it  is  true,  of  cotton  being  carried  from  Alabama  to 
Philadelphia  by  canal,  and  of  wheat  reaching  New  York  over 
the  Erie  route  from  Ohio  and  Indiana.    It  is  noteworthy,  how- 


NATIONAL  EXPANSION,   1815-1860  521 

ever,  that  even  in  1840  only  one  seventh  of  the  freight  carried 
on  New  York  canals  came  from  outside  the  State.  The  river 
system  of  the  Mississippi  proved  still  to  be  the  most  valuable 
outlet  for  the  products  of  the  great  interior  valley,  and  about 
1850  the  value  of  the  wares  which  it  carried  to  the  coast  was 
double  that  reaching  the  seaboard  by  the  Hudson  River  and 
its  canals.  A  line  drawn  east  and  west  through  the  center  of 
Ohio  marked  the  commercial  watershed  between  the  competing 
routes;  north  of  that  line  practically  all  goods  were  shipped  by 
lake  and  canal,  while  south  of  it  only  articles  like  tobacco,  wool, 
and  manufactured  wares  were  sent  by  that  route,  and  most 
products  were  shipped  by  way  of  the  Mississippi.  Indiana 
and  Illinois  showed  a  still  more  decided  tendency  to  the  river 
route.  In  the  reverse  direction,  however,  the  northern  route, 
by  canal  and  lake,  had  the  advantage,  and  the  movement 
to  the  interior  by  this  route  was  double  that  ascending  the 
Mississippi. 

626.  Demand  for  further  improvement  met  by  railroads.  — 
Reviewing  the  substance  of  preceding  sections,  we  find  that  of 
the  new  means  of  transportation  adopted  to  develop  the 
resources  of  the  country  and  to  make  them  available  in  internal 
trade  and  foreign  commerce,  none  had  yet  proved  adequate  to 
meet  the  conditions.  Transportation  on  the  turnpikes  was  too 
expensive  to  permit  the  carriage  of  bulky  freight  over  great 
distances.  River  navigation,  valuable  as  it  was  in  opening 
the  interior  to  commerce,  still  was  tied  fast  to  channels  cut  by 
nature;  the  rivers  must  at  least  be  supplemented  by  feeders 
and  by  connections  across  the  country.  Canals  were  of  great 
service  as  supplements  to  the  rivers,  but  they  too,  were  re- 
stricted in  their  course  by  the  conditions  set  by  nature,  and, 
like  the  rivers,  could  be  used  in  northern  districts  during  only 
part  of  the  year.  What  the  country  needed  was  a  means  of 
transportation  available  throughout  the  year,  free  to  follow 
the  paths  toward  which  the  interests  of  merchants  most  in- 
clined, and  cheap  enough  to  encourage  the  exchange  of  common 
articles  between  points  widely  separated.  The  need  was  met, 
in  the  course  of  time,  by  the  development  of  railroads. 


522  A   HISTORY  OF  COMMERCE 

627.  Early  American  railroads  little  used  for  freight  traffic. 

—  The  operation  of  steam  railroads  began  in  this  country  and 
in  England  at  almost  the  same  time;  the  Baltimore  and  Ohio 
railroad  was  in  course  of  construction  in  1830,  when  the  Liver- 
pool and  Manchester  line  was  opened.  In  this  early  period, 
however,  the  railroad  was  a  much  more  valuable  instrument 
in  the  Old  World  than  in  the  New.  In  England  and  other 
European  countries  the  railroad  found  great  manufacturing 
and  shipping  centers  already  established,  with  large  volumes 
of  valuable  freight  to  be  carried  short  distances;  the  task  before 
it  was  comparatively  easy.  Conditions  were  somewhat  similar 
along  our  eastern  seaboard,  but  in  the  United  States  in  general 
the  railroad  was  wanted  to  develop  agricultural  districts  with 
a  comparatively  sparse  population,  separated  from  industrial 
and  shipping  centers  by  hundreds  of  miles.  The  traffic  offered 
by  these  districts  could  not  bear  the  high  charges  imposed  by 
railroads  in  their  early  period;  these  charges  greatly  exceeded 
those  paid  for  canal  transportation  and  seem  in  some  cases 
to  have  equaled  those  paid  for  carriage  on  turnpikes.  Aside 
from  coal  and  cotton  the  early  American  railroads  carried 
comparatively  little  freight;  and  they  played  but  a  slight  part 
in  the  development  of  commerce. 

628.  Extension  of  the  railroad  system  in  the  West  after 
1850.  —  In  1850  there  were  still  few  railroads  west  of  the 
Alleghany  Mountains.    In  contrast  with  nearly  seven  thousand 
miles  of  line  in  the  States  along  the  eastern  coast  the  States  of 
the  upper  Mississippi  Valley  could  show  little  over  one  thou- 
sand.   Not  a  mile  of  railroad  had  been  built  in  Iowa  and  Min- 
nesota, and  there  was  no  railroad  connection  with  the  East 
in  all  the  country  west  of  the  Mississippi  and  north  of  the 
State  of  Missouri. 

Conditions  were  ready  at.  last  for  the  extension  of  the 
railroad  system  through  the  interior  of  the  country  and  the 
West  saw  many  thousand  miles  of  line  constructed  in  its 
territory  in  the  decade  ending  in  1860.  The  New  York  Central, 
the  Erie,  the  Pennsylvania,  the  Baltimore  and  Ohio,  and  other 


NATIONAL  EXPANSION,   1815-1860  523 

lines  united  the  roads  of  the  interior  with  the  East;  many 
roads  were  built  from  Lakes  Erie  and  Michigan  to  the  Ohio 
and  Mississippi  rivers;  while  another  set  of  roads  extended 
north  from  the  Gulf  of  Mexico,  aiming  to  attract  the  traffic 
of  the  great  valley  southwards. 

629.  Effect  of  the  improvements  in  transportation,  espe- 
cially marked  in  the  following  period.  —  The  commerce  of  the 
country  got  the  full  benefit  of  the  railroad  system  only  after 
1860,  when  various  improvements  led  to  a  great  reduction  in 
freight  rates,  and  stimulated  an  immense  increase  of  traffic. 
The  period  before  the  Civil  War  must  be  regarded  as  one  of 
preparation  for  the  great  commercial  expansion  in  the  period 
following;  the  lines  were  laid,  in  large  part,  but  men  had  not 
learned  to  make  the  best  use  of  them.  Even  before  1860, 
however,  the  railroad  had  become  an  indispensable  instrument 
to  the  commerce  of  the  country.  While  it  did  not  displace 
other  means  of  transportation,  it  forced  them  to 'improvement, 
and  gave  service  in  forms  which  they  could  not  supply.  There 
will  be  little  space  in  the  two  following  chapters  to  refer  to 
the  development  of  the  means  of  transportation  described  here, 
but  the  student  must  bear  in  mind  this  factor,  as  contributing 
always  and  in  very  important  measure  to  the  growth  of  the 
country's  commerce.  We  may  close  this  summary  of  the  sub- 
ject by  giving  an  illustration  of  the  effect  of  transportation  on 
the  value  of  the  resources  of  Ohio;  the  price  of  farm  produce 
in  that  State  rose  50  per  cent  after  the  completion  of  the  canals, 
while  the  railroads  appear  to  have  doubled  the  price  of  flour, 
trebled  the  price  of  pork,  and  quadrupled  the  price  of  corn. 

630.  Prosperity  of  the  American  merchant  marine.  —  The 
period  from  1815  to  1860,  in  which  the  country  first  grappled 
successfully  with  the  problem  of  internal  transportation,  was 
also  the  period  in  which  the  American  merchant  marine  reached 
the  pitch  of  its  prosperity.  Even  after  the  conclusion  of  peace 
in  Europe  in  1815,  which  subjected  our  ships  again  to  the 
competition  of  foreign  carriers  and  to  the  restrictions  of  other 
countries,  American  ship-builders  and  sailors  were  able  to  hold 


524 


A  HISTORY  OF  COMMERCE 


NATIONAL  EXPANSION,   1815-1860 


525 


33 


526  A   HISTORY  OF  COMMERCE 

their  o,wn;  and  the  period  is  marked  by  a  great  increase  in  our 
merchant  tonnage.  Down  to  about  1850  the  wooden  sailing 
ship  was  still  supreme  in  its  control  of  the  ocean  carrying  trade. 
American  builders  developed  the  ship  to  its  highest  type,  the 
clipper,  and  led  the  world  in  the  art  of  naval  construction. 
Their  skill,  and  the  cheapness  of  good  ship  timber,  more  than 
offset  the  higher  prices  which  the  tariff  forced  them  to  pay 
for  materials  and  equipment  such  as  iron,  copper,  cordage,  and 
sail-cloth.  The  officers  and  crews  of  American  vessels  enjoyed 
an  international  reputation  for  their  efficiency. 

631.  Position  and  prospects  of  the  merchant  marine  in  1860. 
—  In  1855  the  tonnage  built  in  the  United  States  was  greater 
than  ever  before  or  since;   the  California  gold  discoveries  had 
caused  a  great  increase  in  the  demand  for  transportation  to 
the  Pacific  Coast,  from  which  the  government  excluded  foreign 
vessels,  and  the  Crimean  War  forced  European  governments 
to  charter  many  American  vessels  for  transport  service.     At 
the  close  of  the  period  (1861)  the  tonnage  of  the  United  States, 
including  that  engaged  in  domestic  trade,  was  not  far  from  one 
third  of  the  total  tonnage  of  the  world;    the  British  Empire 
had  slightly  over  one  third;  and  the  tonnage  of  all  other  coun- 
tries grouped  together  was  but  little  more  than  our  own.    Our 
merchant  fleet  exceeded  by  half  the  amount  necessary  for  the 
carriage  of  all  our  exports  and  imports,  and  earned  a  large 
revenue  from  the  foreign  countries  which  sought  its  service. 

In  one  important  point,  however,  the  prospects  of  the 
American  merchant  marine  were  not  bright.  We  were  not 
keeping  pace  with  the  peoples  of  Europe  in  the  construction 
of  steamers  for  ocean  service,  and  of  iron  vessels  in  general. 
American  steamers  were  not  able  to  win  a  place  of  any  im- 
portance in  the  foreign  carrying  trade;  and  before  1860  a  slack- 
ening of  activity  in  the  building  of  wooden  sailing  ships  was 
noticeable. 

632.  Navigation  policy :    reforms  and  restrictions.  —  The 
period  was  marked  by  the  removal  of  many  of  the  restrictions 
on  foreign  shipping  which  had  been  a  regular  feature  of  govern- 


NATIONAL  EXPANSION,   1815-1860  527 

ment  policy  in  previous  centuries.  Our  ships  were  burdened 
at  first  by  heavy  dues  or  by  prohibitions  in  foreign  ports,  and 
it  was  but  natural  that  our  government  retaliated  by  taxing 
foreign  ships  entering  our  ports.  The  disadvantages  of  this 
system  became  apparent  as  commerce  grew  in  the  nineteenth 
century,  and  a  series  of  reciprocity  treaties  removed  the  former 
discrimination,  and  put  the  ships  of  all  nations  on  substan- 
tially the  same  footing.  The  United  States  held  fast,  however, 
to  certain  features  of  the  old  navigation  policy.  The  coastwise 
trade,  which  was  interpreted  to  include  the  trade  to  the  Pacific 
coast  by  way  of  the  Isthmus  of  Panama  or  around  Cape  Horn, 
was  reserved  absolutely  to  American  vessels;  and  no  vessel 
could  secure  American  registry  unless  it  had  been  built  in  this 
country.  Ships  built  abroad  could  not  sail  under  the  American 
flag  even  though  they  had  been  purchased  and  were  owned 
by  citizens  of  the  United  States. 

QUESTIONS  AND  TOPICS 

1.  Prepare  a  chart,  sect.  612.     [Figures  of  commerce  for  the  inter- 
vening years,  showing  fluctuations,  will  be  found  in  the  U.  S.  Statistical 
Abstract.] 

2.  Review,  in  previous  chapters,  the  accounts  of  the  commercial 
policy  of  European  states  during  this  period. 

3.  The  westward  movement  of  population.     [Manuals  of  U.  S.  his- 
tory;   maps  in  Atlas  of  the  Census.] 

4.  The  population  of  the  country  was  as  follows,  in  round  millions 
(counting  half  a  million  or  over  as  one) :  1790,  4;  1800,  5;   1810,7;  1820; 
10;  1830,13;  1840,17;   1850,23;   1860,31.    Determine  the  average  com- 
merce per  capita,  and  indicate  it  on  the  chart. 

5.  The  commercial  history  of  a  western  town.    [Select  a  town  in  one 
of  the  States  of  the  Mississippi  Valley,  admitted  during  this  period,  and 
determine,  from  local  histories  and  biographies,  the  extent  of  its  trade 
with  other  parts  of  the  country  and  with  foreign  countries.] 

6.  What  towns  of  the  colonial  period  were  situated  at  a  distance  from 
the  sea?    What  towns  grew  to  considerable  size  in  the  interior  of  the 
country  in  this  period,  and  what  were  their  means  of  land  or  water  trans- 
portation?   [Consult  historical  maps,  as  those  in  Hart's  Epochs  of  Ameri- 
can History.] 

7.  (a)  Write  a  report  on  the  history  of  turnpikes  in  the  State  in  which 


528  A  HISTORY  OF  COMMERCE 

you  live.    [Consult  State  and  local  histories,  making  full  use  of  table  of 
contents  and  index.] 

(6)  Development  of  roads  in  the  U.  S.     [Hulbert,  vol.  11,  chap.  1.] 

(c)  The  Pennsylvania  State  Road  in  1796.    [Hulbert,  vol.  11,  chap.  2.] 

(d)  The  Catskill  turnpike.     [Hulbert,  vol.  12,  chap.  6.] 

8.  The  Cumberland  Road.    [Hulbert,  vol.  10;  see  especially  chap.  4, 
stages  and  freight  traffic.] 

9.  What  are  the  chief  river  systems  of  the  country;   what  gaps  exist 
between  them?    How  do  the  facilities  for  river  transportation  in  different 
countries  of  Europe  compare  with  those  of  the  United  States? 

10.  Development  of  the  boats  used  for  river  traffic.    [Hulbert,  vol.  9, 
chap.  4.] 

11.  Character  and  life  of  the  western  river  men.     [Same,  chap.  5.] 

12.  The  invention  of  the  steamboat.    [Encyclopedias;  U.  S.  histories; 
Thurston's  Fulton,  N.  Y.,  1891;  S.  Bullock  in  Conn.  Magazine,  1905,  9: 
440-455,  an  excellent  article  with  illustrations.] 

13.  Write  a  report  on  the  influence  of  the  steamboat  in  building  up 
one  of  the  cities  named.     [Local  histories.] 

14.  Early  canal  projects.     [Hulbert,  vol.  13;  chaps.  2,  3.] 

15.  The  Mohawk  River  route.    [Hulbert,  vol.  14,  chap.  1.] 

16.  Early  projects  for  a  canal  in  the  Mohawk  Valley.    [Same,  chap.  2.] 

17.  The  Erie  Canal.     [Same,  chap.  4.] 

18.  Economic  effects  of  the  Erie  Canal.    [Hulbert,  vol.  14,  chap.  5.] 

19.  Origin  of  American  railroads.    [Johnson,  chap.  2.] 

20.  Did  any  European  country  present  conditions  like  those  of  the 
U.  S.,  in  respect  to  railroad  development?    What  has  been  the  history  of 
railroads  in  Russia?    [See  chap.  44.] 

21.  Growth  of  the  American  railroad  system.     [Johnson,  chap.  3; 
Hadley,  chap.  2;    Coman,  234-242.] 

22.  Because  the  Ohio  farmer  received  more  for  his  products,  does  it 
follow  that  railroads  have  raised  the  price  of  articles  and  forced  consumers 
to  pay  more  for  them? 

23.  Development  of  the  merchant  marine,    1815-1860.     [Marvin, 
chaps.  9,  11,  12;    Abbot,  chaps.  1,  2.] 

24.  American  whalers.     [Marvin,  chap.  8.] 

25.  Navigation  laws  of  the  U.  S.:    history  and  criticism.     [Wells, 
Merch.  marine;    Carnegie  History,  chap.  39.] 


BIBLIOGRAPHY 

See  chapter  xlv  for  general  works. 

SPECIAL  ACCOUNTS.  —  Worthy  P.  Sterns,  **  Foreign  trade  of  U.  S. 
from  1820  to  1840,  Jour.  Pol.  Econ.,  Chicago,    Dec.,  1899,  8:  34-57,  452- 


NATIONAL  EXPANSION,   1815-1860  529 

490;  J.  McGregor,  *  Commercial  statistics;   J.  S.  Homans,  *  Cyclopedia; 
J.  D.  B.  DeBow,  *  Industrial  resources. 

SPECIAL  TOPICS.  —  Hulbert,  Historic  highways,  and  more  briefly  in 
The  paths  of  inland  commerce,  New  Haven,  1920;  E.  R.  Johnson,  Amer. 
railway,  (with  references) ;  A.  T.  Hadley,  Railroad  trans. ;  C.  F.  Adams,  Jr., 
Railroads;  U.  B.  Phillips,  History  of  transportation  in  the  eastern  cotton 
belt  to  1860,  N.  Y.,  1908.  Shipping:  Samuel  E.  Morison,  **  Maritime 
history  of  Massachusetts,  1783-1860,  Boston,  1921;  R.  D.  Paine,  *The 
old  merchant  marine,  New  Haven,  1920;  A.  H.  Clark,  The  clipper  ship 
era,  1843-1869,  N.  Y.,  1910;  A.  T.  Verrill,  The  real  story  of  the  whaler, 
N.  Y.,  1916;  John  H.  Morison,  History  of  American  steam  navigation, 
N.  Y.,  1903.  River  navigation:  H.  W.  Dickinson,  Robert  Fulton,  Lon- 
don, 1913;  D.  L.  Buckman,  Old  steamboat  days,  N.  Y.,  1907;  W.  E.  Ver- 
planck  and  M.  W.  Collyer,  The  sloops  of  the  Hudson,  N.  Y.,  1908;  H.  M. 
Chittenden,  History  of  early  steamboat  navigation  on  the  Missouri  River, 
N.  Y.,  1903.  Canals:  H.  W.  Hill,  Historical  review  of  waterways  and 
canal  construction  in  New  York  State,  Buffalo,  1908,  (Buffalo  Hist.  Soc., 
vol.  12) ;  N.  E.  Whitford,  History  of  the  canal  system  of  the  State  of  New 
York,  Albany,  1906,  2  vol.,  (Supplement  to  Rep.  of  State  Engineer  for 
1904-05) ;  E.  J.  Benton,  The  Wabash  trade  route  in  the  development 
of  the  Old  Northwest,  Baltimore,  1903.  The  West:  K.  Coman, 
**  Economic  beginnings  of  the  Far  West,  2  vol.,  N.  Y.,  1912;  R.  G. 
Thwaites,  The  fur  trade  in  Wisconsin,1812-1825,  Madison,  Wise.,  1912;  I. 
Lippincott,  History  of  manufactures  in  the  Ohio  valley  to  1860,  N.  Y.,  1914. 


CHAPTER   XLIX 
EXPORTS,   1816-1860 

633.  Chief  exports  in  1860.  —  The  following  table  gives 
the  chief  items  among  the  exports  of  the  country  in  1860,  and 
corresponding  items  made  up  from  the  annual  average  of  the 
years  1802-1804,  as  a  basis  from  which  to  appreciate  the 
changes. 

EXPORTS  OF  U.  S.,  MILLIONS  OF  DOLLARS 


1802-4 

1860 

Vegetable  foods  

13 
6 
6 
3 
2 
4 
2 

36 

itted    39 
..28 

27 
191 
15 
20 
4 
13 
37 

307 

316 
26 
56 

Cotton  

Tobacco  

Animal  products  

Fish  products  

Forest  products  

Manufactures  

Total  of  these  items,  omitting  decimals  

Total  domestic  exports  including  items  om 
Total  foreign  exports  

Exports  of  precious  metals  '.  

634.  Changes  since  1800.  —  It  will  be  noted,  as  said  above, 
that  the  foreign  exports  of  the  country  did  not  increase  during 
the  period,  and  were  actually  less  in  1860  than  they  were  about 
1800.  Comparing  the  figures  for  the  total  exports  of  domestic 
merchandise  we  find  that  this,  the  most  important  branch  of 
our  commerce,  increased  about  eightfold  in  value  between 
the  years  chosen  for  comparison.  All  of  the  separate  classes 

530 


EXPORTS,    1815-1860  531 

of  wares  contributed  to  the  growth  of  our  export  trade,  but  in 
very  different  measure,  as  is  apparent  when  the  figures  are 
compared.  The  export  industries  which  were  most  prominent 
in  the  colonial  and  early  national  periods  had  not  kept  their 
place  in  the  movement  of  progress,  and  their  output  for  export 
had  merely  doubled,  roughly,  in  this  period.  There  is  apparent, 
on  the  other  hand,  a  great  growth  in  the  export  of  manufac- 
tured wares;  and  the  export  of  cotton,  which  in  1789  was 
practically  nothing,  and  about  1800  was  less  than  seven  million, 
had  risen  to  the  enormous  sum  of  one  hundred  and  ninety 
million,  considerably  more  than  half  in  value  of  the  total 
exports  of  the  country.  The  history  of  commerce  presents  no 
parallel  to  the  rapid  rise  of  cotton  in  the  commerce  of  the 
United  States  at  this  period,  and  the  subject  demands  careful 
consideration. 

635.  Cotton  before  1800.  —  The  word  cotton,  now  applied 
exclusively  to  the  fibers  attached  to  the  seed  of  a  shrub  of 
the  mallow  family,  was  formerly  a  general  term  used  for 
vegetable  fibers  coming  from  several  different  sources.  The 
fibers  acquired  from  the  present  cotton  shrub,  or  from  a  vine 
or  tree,  had  been  used  for  textile  fabrics  from  ancient  times. 
The  manufacture  of  cotton  goods,  however,  was  neglected  in 
Europe  until  the  eighteenth  century,  and  at  the  beginning  of 
our  national  existence  much  of  the  supply  of  raw  cotton  still 
came  from  the  ancient  seat  of  the  cotton  industry  in  Asia. 
From  almost  the  beginning  of  the  colonial  period  in  American 
history  experiments  had  been  made  with  cotton  culture,  but 
the  colonists  found  no  incentive  to  devote  themselves  to  cotton 
cultivation  on  a  large  scale.  The  separation  of  the  fiber  from 
the  seeds  was  a  tedious  process,  there  was  no  market  for  raw 
cotton  in  the  colonies,  and  other  crops  were  found  to  return 
larger  profits  to  the  cultivator.  Cotton  was  grown  success- 
fully on  some  of  the  islands  of  semi-tropical  America,  but  the 
territory  now  forming  the  United  States  counted  for  nothing 
as  a  source  of  cotton  when  the  national  government  was 
established  in  1789.  So  weak,  in  fact,  was  the  cotton  industry 


532  A   HISTORY  OF  COMMERCE 

at  this  time,  that  it  was  protected  by  a  duty  of  three  cents  a 
pound  on  imported  cotton,  included  in  the  first  national  tariff. 

636.  Growth  in  importance  of  cotton.  —  Various  influences, 
however,  combined  about  1789  to  bring  into  prominence  the 
possibilities  of  cotton  as  a  regular  crop.    The  great  improve- 
ments in  textile  machinery  caused  at  this  time  an  increased 
demand  for  the  raw  material.     The  other  crops  which  were 
then  raised  in  the  territory  now  occupied  by  cotton  were  not 
flourishing.    The  indigo  culture,  for  reasons  which  have  been 
noted  abovQ,  was  unpopular;   rice  culture  had  declined  during 
the  Revolution,  as  the  war  had  broken  up  the  organization  of 
slave  labor  in  the  rice  districts;    tobacco  was  giving  smaller 
returns,  as  the  land  was  exhausted  by  continuous  cropping. 
A  new  variety  of  cotton,  moreover,  had  recently  been  introduced 
from  the  Bahamas,  known  as  sea-island  or  long-staple;    the 
fibers  were  long  and  silky,  suited  to  the  manufacture  of  fine 
threads  and  fabrics,  and  they  were  more  readily  separated 
from  the  seeds  than  were  the  fibers  of  the  ordinary  short-staple 
or  upland  variety.     The  cultivation  of  this  variety  was  an 
assured  success  in  the  narrow  strip  along  the  coast  where  it 
could  be  grown;    and  further  inland,  where  sea-island  cotton 
could  not  be  raised,  people  began  to  strive  persistently  to 
overcome  the  difficulties   of  the   cultivation  of  the  upland 
variety. 

637.  Demand  for  efficient  means  of  cleaning  cotton.  —  The 
chief  obstacle  to  the  cultivation  of  upland  cotton  was  now 
the  difficulty  of  separating  the  fibers  from  the  seeds.     To 
perform  the  process  by  hand-picking  was  out  of  the  question, 
as  a  man  in  this  way  could  clean  only  one  pound  of  cotton  in 
a  day.     Various  simple  machines  had  been  devised  to  effect 
the  separation  of  the  seeds,  and  these  were  fairly  successful 
when  applied  to  sea-island  cotton,  enabling  a  man  to  clean 
fifty  or  sixty  pounds.     None  of  them,  however,  was  a  success 
when  applied  to  upland  cotton,  whose  short  fibers  adhered 
very  tenaciously  to  the  seeds. 

The  problem  was  solved  by  a  native  of  New  England,  Eli 


EXPORTS,    1815-1860  533 

Whitney,  who  had  gone  south  as  a  teacher,  and  who  invented 
the  cotton  gin  (engine)  which  proved  capable  of  cleaning 
upland  cotton,  and  so  made  the  cultivation  of  that  crop  a 
commercial  possibility.  The  conditions  may  be  described  in 
Whitney's  own  words,  used  in  a  memorial  to  the  government, 
asking  for  an  extension  of  his  patent.  He  showed  "That, 
being  in  the  state  of  Georgia  in  the  year  1793,  he  was  informed 
by  the  planters  that  the  agriculture  of  that  State  was  unpro- 
ductive, especially  in  the  interior,  where  it  produced  little  or 
nothing  for  exportation.  That  attempts  had  been  made  to 
cultivate  cotton,  but  that  the  prospect  of  success  was  not 
flattering.  That  of  the  various  kinds  which  had  been  tried  in 
the  interior  none  of  them  were  productive,  except  the  green 
seed  cotton,  which  was  so  extremely  difficult  to  clean  as  to  dis- 
courage all  further  attempts  to  raise  it.  That  it  was  generally 
believed  this  species  of  cotton  might  be  cultivated  with  great 
advantage,  if  any  cheap  and  expeditious  method  of  separating 
it  from  its  seeds  could  be  discovered,  and  that  such  a  discovery 
would  be  highly  beneficial  both  to  the  public  and  the  inventor." 
638.  Invention  of  the  saw  gin  by  Whitney,  1793.  —  Encour- 
aged by  the  terms  of  the  national  patent  law,  on  which  he 
relied  for  a  monopoly  of  his  invention,  Whitney  set  to  work, 
and  in  a  short  time  had  devised  a  form  of  cotton-gin  which, 
with  minor  alterations,  has  remained  in  use  ever  since.  The 
raw  cotton  was  fed  through  a  wire  grating  to  a  cylinder  on 
the  surface  of  which  were  wires  or  saw  teeth,  that  caught  the 
fibers  and  pulled  them  through,  the  seeds  being  retained  by 
the  grating.  The  gin  was  a  complete  success,  enabling  a  man 
to  clean  several  hundred  pounds  of  cotton  in  a  day.  Whitney 
himself  reaped  comparatively  little  benefit  from  his  invention, 
as  he  found  it  impossible  to  prevent  infringements;  he  said  in 
1812,  with  slight  exaggeration,  that  the  total  amount  which 
he  had  realized  was  less  than  the  saving  in  cost  effected  in 
one  hour  by  his  machines  then  in  operation.  The  country, 
however,  was  an  immense  gainer,  for  the  last  obstacle  to  the 
successful  cultivation  of  cotton  was  removed. 


534  A   HISTORY  OF  COMMERCE 

639.  Extension  of  cotton  cultivation,  and  increase  of  exports. 
—  The  exports  of  cotton,  which  in  1793,  the  year  of  Whitney's 
invention,  had  been  only  two  thousand  bales,  rose  by  leaps 
and  bounds.     In   1802  they  passed   one  hundred  thousand 
bales,  in  1822  five  hundred  thousand,  in  1834  one  million,  in 
1843  two  million,  in  1858  three  million.     The  States  along 
the  Atlantic  coast,  in  which  cotton  culture  first  sprang  up, 
continued  for  many  years  to  be  the  main  seat  of  the  industry. 
After  the  war  of  1812,  however,  the  cultivation  of  cotton 
spread  in  the  Southwest,  where  rich  river  bottoms  and  prairie 
lands  offered  soil  of  exceptional  fertility,  and  where  the  numer- 
ous rivers  facilitated  transportation.     The  exports  of  cotton 
from  New  Orleans  increased  tenfold  in  the  years  1816  to  1830, 
and  at  this  later  date  the  western  States  produced  the  larger 
part  of  the  cotton  supply.    At  the  close  of  the  period  which 
we  are  studying  (1860)  over  half  of  the  total  crop  was  raised 
in  the  three  States  Alabama,  Mississippi,  and  Louisiana. 

640.  King  cotton.  — •  The  success  of  the  cotton  culture  in 
this  country  was  attended  by  far-reaching  results  in  economic 
and  political  history.    We  must  restrict  ourselves  here  to  the 
commercial  aspects  of  the  cotton  industry,  without  discussing 
such  topics  as  its  relations  to  slavery  and  its  influence  in 
bringing  on  the  Civil  War. 

Never -in  the  world's  history  have  producers  enjoyed  such 
an  exalted  position  in  commerce  as  that  which  was  held  by 
the  planters  of  the  cotton  States.  The  larger  part  of  the 
world's  supply  of  an  article  regarded  as  of  the  first  necessity 
came  from  a  comparatively  restricted  area  in  the  South.  The 
people  of  Europe  and  other  continents  had  become  used  to 
cotton  textiles,  great  factories  had  grown  up  to  manufacture 
them,  but  it  seemed  as  though  people  must  go  unclad  and 
factories  must  stop  work,  if  the  United  States  should  refuse 
to  deliver  raw  cotton.  For  years  before  the  Civil  War  fear 
of  a  cotton  famine  had  haunted  the  minds  of  European  manu- 
facturers. 

Cotton  took  a  position  in  national  commerce  equal  in 


EXPORTS,   1815-1860  535 

importance  to  that  which  it  occupied  in  international  trade. 
Not  only  did  it  furnish  directly  more  than  half  of  the  total 
exports  of  the  United  States;  it  shared  its  prosperity  with  other 
industries,  and  influenced  the  development  of  every  part  of 
the  country.  Northern  merchants  made  fortunes  in  handling 
and  transporting  southern  cotton;  the  manufacturers  of  every 
district  found  in  the  South  a  market  where  people  had  plenty 
of  money  to  buy  goods  which  they  were  too  busy  to  make; 
the  farmers  of  the  Northwest  supplied  in  considerable  part  the 
needs  of  the  South  for  food.  The  people  of  the  South  were 
not  blind  to  these  facts,  and  tended,  indeed,  to  exaggerate 
their  importance.  As  a  sample  of  their  attitude  this  extract 
from  a  speech  by  Senator  Hammond  in  1858  may  be  taken: 
"Without  firing  a  gun,  without  drawing  a  sword,  should  they 
make  war  on  us,  we  could  bring  the  whole  world  to  our  feet. 
What  would  happen  if  no  cotton  was  furnished  for  three  years? 
I  will  not  stop  to  depict  what  every  one  can  imagine,  but  this 
is  certain,  England  would  topple  headlong,  and  carry  the 
whole  civilized  world  with  her.  No,  you  dare  not  make  war 
on  cotton.  No  Power  on  the  earth  dares  to  make  war  on  it 
—  cotton  is  king." 

641.  Slight  contributions  of  the  South  to  exports,  aside  from 
cotton.  —  In  the  period  before  the  Civil  War,  when  southern 
plantations  were  worked  by  slaves,  it  was  considered  to  be  the 
best  policy  to  plant  cotton  continuously,  without  alternation 
or  diversification  of  crops,  though  this  policy  led  necessarily 
to  exhaustion  of  the  soil  and  required  frequent  removals  to 
fresh  land.  Cotton  was,  therefore,  the  single  product  which 
the  South  contributed  in  great  quantities  to  the  internal  and 
foreign  trade  of  the  country.  The  rice  culture  was  main- 
tained on  the  eastern  coast  and  was  extended  along  the  Gulf, 
but  there  was  little  increase  in  the  export  of  rice,  as  the  crop 
was  consumed  largely  at  home.  Indigo  disappeared  from 
the  list  of  American  products.  Tobacco  production  spread 
in  the  States  of  the  Ohio  valley,  and  the  exports  of  this  ware 
rose  after  the  middle  of  the  century  to  double  the  value  which 


536  A  HISTORY  OF  COMMERCE 

they  had  about  1800,  but  a  comparison  of  the  figures  given 
at  the  opening  of  the  chapter  shows  that  tobacco  declined 
still  further  from  the  position  it  had  held  in  colonial  times. 

642.  Trade  between  the  North,  the  South,  and  Europe.  — 
In  1860  only  one  third,  approximately,  of  the  total  exports 
of  the  country  came  from  the  North.    Conditions  in  this  period 
resembled  closely  those  of  colonial  times,  with  the  substitution 
of  the  southern  States  for  the  West  Indies  in  the  triangle  of 
trade.     The  North  imported  from  Europe  far  more  than  it 
could  export  in  return;  it  shipped  South,  however,  large  quan- 
tities of  foodstuffs  and  manufactures;    and  the  South  gave  in 
exchange  bills  on  Europe  which  were  drawn  against  the  great 
quantities  of  cotton  sent  thither.     Cotton  from  the  South  to 
Europe,  manufactures  from  Europe  to  the  North,  manufactures 
and  foodstuffs  from  the  North  to  the  South:    such  were  the 
three  sides  of  the  triangle. 

643.  Chief  exports  from  the  North.  —  The  North  could  no 
longer  look  to  colonial  industries,  like  fisheries  and  forestry, 
to  provide  the  means  of  purchasing  the  foreign  wares  which 
it  required.    The  exports  from  those  industries  had  increased, 
it  is  true,  but  were  still  so  small  that  they  had  become  items 
of  slight  importance  in  the  total.     The  exports  of  manufac- 
tures, on  the  other  hand,  had  grown  very  rapidly,  and  formed 
now  a  considerable  item  in  our  trade.    The  South  contributed 
to  this  class  some  wares  (manufactured  tobacco,  turpentine, 
cottonseed  oil  cake),  but  the  products  of  developed  manufac- 
ture came  almost  entirely  from  the  North;    manufactures  of 
cotton  and  of  iron  were  the  leading  items.    The  rise  of  these 
manufactures  will  be  treated  in  the  next  chapter.     At  the 
North,  however,  as  at  the  South,  agricultural  products  held  the 
first  place  among  the  exports.    Foodstuffs  and  animal  products 
were  exported  to  the  value  of  about  fifty  million  dollars,  and 
these  wares  came  chiefly  from  the  North.    The  total  is  small  in 
comparison  with  that  of  the  cotton  export  (one  hundred  and 
ninety  million),  and  gave  little  promise  of  the  remarkable  ex- 
pansion which  was  to  follow  after  the  Civil  War;  still,  foodstuffs 


EXPORTS,   1815-1860  537 

and  animal  products  were  the  mainstay  of  the  Northern  ex- 
port trade. 

644.  Gradual  increase  in  the  exports  of  foodstuffs.  —  The 
increase  in  the  exports  of  northern  agriculture  was  rather  less 
than  would  be  expected  from  a  people  rapidly  increasing  in 
numbers   and   provided  with   an  abundance  of  fertile  land. 
For  many  years  after  the  close  of  the  war  of  1812  commerce 
in  wheat  and  flour  languished,   and  even  toward   1840  the 
export  of  those  articles  was  less  than  it  had  been  at  the  opening 
of  the  century.    There  was  talk,  even,  of  imposing  a  duty  on 
wheat,  to  protect  the  farmers  of  the  Atlantic  seaboard  from 
imports.     As  late  as  1835  Ohio  was  the  only  grain-exporting 
district  of  the  West,  and   the   first   grain   shipment   on   the 
Great  Lakes,  of  which  there  is  record,  was  made  about  that 
time.     Chicago  became  of  importance  as  a  center  of  grain 
shipments  only  about  1850.    In  the  decade  from  1850  to  1860, 
however,  the  Chicago  shipments  increased  (roughly)  from  two 
to  twenty  million  bushels,  and  the  total  exports  rose  rapidly; 
canals  and  railways  were  at  last  bringing  the  cheap  grain  from 
the  West  to  the  people  of  Europe,  who  at  last  were  ready  to 
welcome  it.    The  export  of  animal  products  was  growing  also. 
Lard  and  pickled  pork  were  the  chief  items  under  this  head, 
for  the  lack  of  modern  appliances  prevented  the  export  of 
fresh  meat;  but  the  price  of  hogs  at  Cincinnati  doubled  in  the 
fifteen  years  preceding  1860,  and  western  farmers  were  en- 
couraged to  give  increased  attention  to  the  supply  of  animal 
products. 

645.  Exports  of  precious  metals;   result  of  the  California 
gold  discoveries.  —  The  last  item  in  the  list  of  exports  given 
at  the  beginning  of  the  chapter  is  that  of  precious  metals, 
which  we  shipped  abroad  to  the  value  of  more  than  fifty 
million  dollars.     Ordinarily  the  exports  and  imports  of  pre- 
cious metals  are  not  included  in  the  figures  of  a  country's 
trade.    Coin  and  bullion  are  used  to  make  up  the  balance  of 
accounts  between  different  countries;  they  may  leave  a  country 
one  year  and  may  return  to  it  the  next  year;  and  they  repre- 


538  A   HISTORY  OF  COMMERCE 

sent,  therefore,  no  contribution  to  commerce  like  that  of  the 
shipment  of  merchandise.  An  exception  must  be  made,  how- 
ever, in  the  case  of  the  few  countries  which  produce  such 
quantities  of  gold  and  silver  that  they  can  regularly  export  a 
surplus.  The  mines  of  precious  metals  are  to  these  countries 
as  much  a  commercial  resource  as  are  the  coal  or  iron  mines 
to  countries  like  England  and  Germany.  The  United  States 
was  not  at  first  among  these  favored  countries:  it  produced 
little  gold  and  less  silver,  and  needed  to  import  most  of  the 
precious  metals  which  it  required  for  use  as  currency  and  in 
the  arts.  These  conditions  were  suddenly  reversed  by  the 
discovery  of  gold  in  California  in  1848.  The  gold  production 
of  the  country,  which  had  been  formerly  less  than  a  million 
dollars  a  year,  had  risen  by  1850  to  fifty  million,  and  pro- 
vided the  country  with  a  handsome  surplus  which  it  could 
afford  to  exchange  abroad  for  merchandise. 

QUESTIONS  AND   TOPICS 

1.  Prepare  a  graphic  chart  of  the  figures,  sect.  633,  for  comparison 
with  earlier  and   later   conditions. 

2.  Review  the  distinction  between   domestic  and  foreign  exports. 
The  principal  foreign  wares  exported  from  the  U.  S.  in  1860  were  as  fol- 
lows, in  millions  of  dollars:  coffee  2.2,  sugar  2.1,  tea  1.9,  hides  1.6,  tobacco 
0.7.    From  what  countries  do  you  think  these  wares  came? 

3.  Write  a  report  on  one  of  the  following  topics: 

(a)  The  cotton  plant  and  cotton  fibre. 
(6)  Different  varieties  of  cotton. 

(c)  History  of  cotton,   outside  America,  before  1800. 

(d)  History  of  cotton  in  America  before  1800. 

[Encyclopedias;     commercial    geographies;     Hammond,    pp.    3-33, 
references  in  bibliography.] 

4.  Invention  of  the   cotton  gin  by  Whitney,   [Hammond;    Amer. 
Hist.  Review,  Oct.,  1897,  3:  90-127.1 

5.  What  changes  have  been  made  in  the  cotton  gin  since  its  inven- 
tion?   [Encyclopedia.] 

6.  How  long  do  you  think  the  world  would  have  had  to  wait  for  an 
efficient  gin  if  Whitney  had  not  supplied  the  need? 

7.  Importance  of  cotton  in  southern  agriculture  before  the  Civil  War. 


EXPORTS,   1815-1860  539 

[Hammond,  67-119;   J.  A.  B.  Scherer,  Cotton  as  a  World  power,  N.  Y., 
1916.] 

8.  What  other  wares  have  held  the  position  of  "king"  in  the  com- 
mercial countries.     In  what  period  and  in  what  country  were  the  follow- 
ing wares  especially  important  among  the  exports:  tin,  silk,  wool,  spices, 
silver? 

9.  Connection  of  cotton  and  slavery.     [Hammond,  34-66.] 

10.  The  cotton  trade,  1815-1860.     [Hammond,  243-277.] 

11.  Rice  culture  before  the  Civil  War.     [Depew,  chap.  38  by  Tal- 
mage;    DeBow,  vol.  2.] 

12.  Later  history  of  American  fisheries,  and  international  questions 
to  which  they  have  given  rise.    [Census;   McMaster  and  Moore  in  Cam- 
bridge Mod.  hist.,  vol.  7,  363  ff.,  657  ff.;  Carnegie  History,  vol.  2,  part  2.] 

13.  Trade  in  turpentine  and  rosin.    [Census,  1900,  9:  1001-1012.] 

14.  The  development  of  the  American  lumber  industry.     [Depew, 
chap.  30,  by  Fernow.] 

15.  Development  of  Cincinnati  or  Chicago  as  a  market  for  meat  and 
breadstuffs.     [Local  histories.] 

16.  What  countries  were  the  chief  sources  of  supply  of  gold  and 
silver  before  1850?     [Encyclopedias.] 

17.  The  California  gold  discovery.     [Narrative  histories  of  U.  S.] 

18.  Commerce  of  California  before  the  discovery  of  gold.    [Read  the 
interesting  narrative  of  a  sailor's  life  by  R.  H.  Dana,  Two  years  before  the 
mast,  Boston,  Houghton.] 

19.  The  overland  route  to  California.    [Henry  Inman,  The  old  Santa 
Fe  trail,  N.  Y.,  Macmillan,  1899.     Salt  Lake  trail,  N.  Y.,  1898.] 

20.  Development  of  gold  and  silver  mining.    [C.  H.  Shinn,  Story  of 
the  mine,  N.  Y.,  Appleton,  1896.] 

BIBLIOGRAPHY 
See  chapter  xlviii. 


CHAPTER    L 
IMPORTS,   POLICY,   DIRECTION   OF   COMMERCE,   1815-1860 

646.  Chief  imports  in  1860.  —  The  imports  of  the  United 
States  have  been  so  varied  in  character  that  it  is  impossible  to 
classify  them  with  any  exactness.     An  attempt  will  be  made 
in  this  section,  however,  to  indicate  the  leading  items  in  our 
imports  in  1860,  giving  values  in  round  millions  of  dollars. 
Of  the  total  of  the  year,  354,  the  largest  share  fell  to  manu- 
factures.    Under  this  head  the  chief  place  was  taken  by  the 
textiles  (wool  38,  silk  33,  cotton  32,  linen  10);    nearly  one 
third  of  the  total  imports  of  the  country  was  derived  from 
these  four  leading  branches  of  the  textile  manufacture.    Most 
of  the  other  manufactures  imported  fell  below  the  mark  of 
5  millions;    a  noteworthy  exception  is  the  item  of  iron  and 
steel  in  various  forms,  amounting  to  21  millions.     In  com- 
parison with  the  amount  of  manufactures  imported,  the  class 
of  raw  materials,  to  be  used  for  manufacture  in  this  country, 
was  still  small;  we  purchased  abroad  considerable  amounts  of 
hides  and  skins,  wool,  etc.,  but  in  general  we  either  manu- 
factured our  wares  out  of  materials  procured  at  home  or  sent 
abroad  for  the  finished   product.     The  colonial  wares  had 
gained  both  in  value  and  in  the  proportion  which  they  formed 
of  the  total  imports;   the  chief  items  in  this  class  were  sugar 
31,  coffee  21,  tea  8,  cigars  and  tobacco  6,  molasses  5,  alto- 
gether amounting  to  about  one  fifth  of  the  imports  of  the 
year. 

647.  Significance  of  the  import  trade  at  this  time.  —  The 
general   character  of  our  import  trade,   evidently,   had  not 
changed  greatly  in  the  seventy  years  since  the  establishment 
of  the  national  government.    The  attractions  of  farming  were 

540 


IMPORTS,   DIRECTION  OF  COMMERCE,  1815-1860        541 

so  great,  when  fertile  land  was  to  be  had  in  abundance  and 
when  there  was  an  eager  demand  for  such  products  as  cotton 
and  foodstuffs,  that  the  American  people  still  gave  most  of  its 
energy  to  raising  raw  materials;  and  found  it  profitable  still  to 
look  to  other  countries  for  much  of  its  supply  of  manufactured 
wares.  The  policy  of  protection,  which  was  established  in 
the  period  under  consideration,  had  not  as  yet  succeeded  in 
building  up  manufactures  capable  of  supplying  the  wants  of 
the  home  market.  The  comparatively  small  amount  of  ma- 
terials imported  for  our  factories  showed  that  our  manufactures 
were  still  local  in  character,  without  the  strength,  or  else 
denied  the  opportunity,  to  reach  out  and  draw  from  distant 
sources  the  raw  materials  which  they  could  work  up  and  return 
to  the  currents  of  the  world's  trade. 

The  growth  in  the  imports  of  colonial  products  represented 
the  increase  of  general  prosperity,  enabling  the  people  to  con- 
sume luxuries  in  greater  quantity.  Dividing  the  amount  of 
these  wares  imported  by  the  population  of  the  country,  and 
so  securing  a  rough  idea  of  the  share  falling  to  each  individual, 
we  find  that  the  per  capita  consumption  rose  as  follows  from 
1790  to  1860:  coffee  from  about  1  pound  in  1790  to  over  5 
pounds  in  1860,  sugar  from  less  than  5  pounds  to  over  30. 

648.  Growth  of  domestic  manufactures.  —  Though  the  im- 
ports of  manufactured  wares  increased  greatly  in  the  course 
of  this  period,  it  must  not  be  assumed  that  the  United  States 
was  as  wholly  dependent  on  foreign  manufactures  in  1860  as 
it  had  been  in  1790.  A  population  growing  rapidly  both  in 
numbers  and  in  welfare  caused  a  demand  for  manufactures 
which  stimulated  some  producers  to  choose  manufacturing 
instead  of  farming  for  their  livelihood,  and  the  government 
aided  these  individuals  by  taxing  imported  wares,  and  so 
giving  the  domestic  producer  an  advantage  in  the  home  market. 
In  the  following  sections  we  shall  survey  the  chief  branches 
of  manufacture  which  grew  up  in  the  United  States  at  this 
time,  and  consider  the  bearing  of  the  protective  tariff  on  their 
development. 


542  A   HISTORY  OF  COMMERCE 

649.  Increase  in  the  use  of  coal.  —  Some  idea  of  the  develop- 
ment of  modern  forms  of  manufacture  in  the  United  States 
can  be  gained  by  tracing  the  history  of  coal,  the  great  source 
of  power  for  the  developed  system  of  factory  industry.     The 
demand  for  coal  was  still  very  small  in  the  first  quarter  of 
the  century;    in  1830  the  total  production  was  less  than  half 
a  million  tons,  and  the  United  States  was  surpassed  in  coal 
output  by  four  of  the  states  of  Europe.    The  second  quarter 
of  the  century  was  marked  by  a  great  extension  in  the  use 
of  steam  power,   and   the  successful   application  of  coal  to 
iron  making;    by   1850  the  United  States  had  reached  the 
second  place  among  the  countries  of  the  world  in  coal  produc- 
tion, with  an  output  of  over  six  million  tons.     Small  as  this 
seems  in  comparison  with  the  output  of  Great  Britain  at  that 
time  (54  million),  or  the  output  of  the  United  States  in  1913 
(over  500),  it  marked  a  tremendous  advance  over  conditions  as 
they  were  about  1800,  and  showed  that  at  least  the  country  had 
passed  through  the  preparatory  stage  of  industrial  development. 

650.  Sluggish  development  of  the  iron  industry.  —  While  the 
use  of  coal  is  perhaps  the  best  index  of  a  country's  development 
in  the  modern  forms  of  manufacturing  and  transportation, 
the  use  of  iron  is  also  certainly  of  great  significance;    iron 
is  the  fulcrum  through  which  the  power  of  steam  is  applied, 
to  repeat  Jevons'  figure  of  speech.    Great  importance  attached, 
therefore,  as  has  been  noted  in  previous  chapters,  to  the  im- 
provements introduced  in  the  English  iron  manufacture  towards 
1800,  by  which  it  was  freed  from  dependence  on  charcoal,  and 
was  enabled  to  turn  out  increased  quantities  of  pig  and  bar 
iron  at  reasonable  prices.     American  iron  makers  showed  a 
slackness  which  we  find  it  hard  now  to  forgive  in  adopting 
the  improved  processes.    Coal  and  coke  were  not  used  in  the 
American  iron  manufacture  until  about  1840,  and  the  new 
methods  of  puddling  and  rolling,  which  had  transformed  the 
English  iron  industry,  were  applied  in  this  country  only  shortly 
before  that  date,  about  half  a  century  after  their  introduction 
in  England.    Some  excuse  can  be  found  for  our  delay  in  the 


IMPORTS,   DIRECTION  OF  COMMERCE,  1815-1860      543 

lack  of  transportation  facilities  for  bringing  the  iron  ore  and 
coke  together.  The  result,  at  any  rate,  was  unfortunate.  A 
heavy  duty  was  laid  on  imported  iron,  to  protect  the  home 
producer,  but  did  not  make  up  for  his  inefficiency.  It  was 
necessary,  therefore,  throughout  the  period,  to  import  a  con- 
siderable part  of  the  necessary  pig  and  bar  iron  and  steel, 
paying  the  higher  prices  caused  by  the  tariff;  and  the  machine 
industries  could  not  but  suffer  from  the  added  expense.  Down 
to  1860  our  iron  industry  was  not  strong  enough  to  export 
crude  iron  in  any  quantity,  though  American  ingenuity  suc- 
ceeded in  finding  a  market  for  considerable  quantities  of  iron 
manufactures. 

651.  Success  of  the  cotton  manufacture.  —  With  one  of  the 
branches  of  textile  manufacture,  that  of  cotton,  the  Americans 
had  more  success.     Thanks  to  the  alertness  of  the  cotton 
manufacturers  in  introducing  improved  machinery,  and  to  the 
advantages  they  enjoyed  in  their  supply  of  raw  material,  they 
had  soon  outgrown^the  need  of  protection.    The  higher  wages 
which  they  paid  to  American  laborers  were  more  than  offset 
by  the  quantity  of  work  turned  out,  and  in  the  manufacture 
of  the  common  sorts  of  piece  goods  they  did  not  fear  the  com- 
petition of  any  other  country.     Large  manufacturing  towns 
grew  up  in  New  England  to  meet  the  demand  for  cloth  which 
formerly  had  been  made  in  the  household  of  the  consumer, 
and  by  1850  there  were  as  many  cotton  spindles  at  work  in 
New  England  as  there  were  inhabitants.     American  cottons 
were  sold  so  readily  in  South  America  and  other  foreign  markets 
that  English  manufacturers  condescended  to  imitate  them,  and 
our  exports  of  cotton  manufactures  in  1860  amounted  to  over 
ten  million  dollars,  more  than  double  the  export  of  fish  products, 
and  not  far  below  the  export  of  forest  products.    The  strength 
of  the  American  cotton  manufacture  lay  in  the  production  of 
plain  cloth;    the  bulk  of  the  imports  consisted  of  finer  and 
fancy  products. 

652.  Failure  to  establish  a  strong  woolen  manufacture.  — 
The  United  States  was,  of  course,  peculiarly  fortunate  in  its 


544  A   HISTORY  OF  COMMERCE 

supply  of  raw  material  for  the  cotton  manufacture.  It  en- 
joyed no  such  advantage  with  respect  to  wool.  The  wool 
fibers  from  American  sheep  were  comparatively  short,  and 
unsuited  to  the  manufacture  of  the  finer  woolens  and  worsteds. 
Manufacturers  were  hampered  in  their  use  of  other  wools  by 
a  tariff  designed  to  protect  the  sheep  growers,  and  paid  for 
other  raw  materials  higher  prices  than  their  competitors  in 
England,  while  they  could  not,  as  in  the  cotton  industry, 
make  up  for  the  higher  wages  in  this  country  by  the  skilful 
application  of  machinery.  Under  these  conditions  the  duties 
designed  to  check  the  importation  of  woolen  manufactures 
from  abroad  were  only  a  partial  protection  to  the  American 
producer;  and  the  woolen  manufacture  did  not  flourish  in  this 
country.  We  could  in  large  part  supply  the  demand  of  the 
home  market  for  coarser  fabrics  (flannels,  blankets,  etc.),  but 
we  manufactured  no  wool  for  export,  and  we  continued  to 
import  the  finer  fabrics. 

653.  Other  manufactures.  —  In  the  manufacture  of  other 
textile  products  which  were  imported  in  considerable  amounts, 
silk  and  linen,  the  United  States  made  no  important  progress 
during  this  period.  Sewing  silk  and  silk  trimmings  were  made 
in  the  country,  but  the  great  bulk  of  silk  manufactures  were 
bought  in  France  and  England,  while  there  were  only  the 
beginnings  of  a  linen  manufacture  in  this  country  before  the 
Civil  War. 

Other  manufactures  existed  besides  those  named,  but  the 
most  important  of  them  were  devoted  chiefly  to  the  first 
processes  in  working  up  raw  materials,  and  scarcely  correspond 
to  our  ideas  of  manufacturing  at  the  present  time.  This 
point  is  illustrated  by  the  list  of  domestic  manufactures  ex- 
ported from  the  country  in  1860,  as  given  by  the  government. 
Of  the  total  of  37  millions,  the  items  cotton  10.9  and  iron 
5.7  were  the  product  of  developed  manufacture,  and  the  same 
may  be  said,  perhaps,  of  the  item  copper  and  brass  and  their 
manufactures,  1.6.  Among  the  other  items,  however,  the 
leading  products  were  of  a  different  character,  and  showed 


IMPORTS,   DIRECTION  OF  COMMERCE,   1815-1860     545 

strength  in  raw  materials  rather  than  in  manufacture  (manu- 
factured tobacco  3.3,  spirits  of  turpentine  1.9,  oil  cake  1.6, 
household  furniture  1.0). 

654.  Dependence  of  the  South  on  the  North  for  manufac- 
tured wares.  —  It  is  noteworthy  that  most  of  the  manufactures 
which  grew  up  in  the  United  States  in  this  period  were  estab- 
lished in  the  North.     The  prevalence  of  slavery  in  the  South 
and  the  attractions  of  agriculture  in  that  section  prevented  the 
rise   of   any   considerable   manufacturing   industry;    and   the 
South  manufactured  even  of  its  staple  product,  cotton,  less 
than  one  fifth  as  much  as  the  mills  of  the  North.    Conditions 
were  thus  adapted  to  the  triangular  trade,  as  it  has  been 
termed  above,  by  which  surplus  shipments  from  the  North 
to  the  South  balanced  surplus  shipments  from  the  South  to 
Europe.     The  results  were  set  forth  in  the  following  extract 
from  a  book  published  by  a  Southerner  in  1857: 

"In  one  way  or  another  we  are  more  or  less  subservient  to 
the  North  every  day  of  our  lives.  In  infancy  we  are  swaddled 
in  Northern  muslin;  in  childhood  we  are  humored  with  Northern 
gewgaws;  in  youth  we  are  instructed  out  of  Northern  books; 
at  the  age  of  maturity  we  sow  our  'wild  oats'  on  Northern  soil; 
...  in  the  decline  of  life  we  remedy  our  eyesight  with  Northern 
spectacles;  in  old  age  we  are  drugged  with  Northern  physic; 
and,  finally,  when  we  die,  our  inanimate  bodies,  shrouded  in 
Northern  cambric,  are  stretched  upon  the  bier,  borne  to  the 
grave  in  a  Northern  carriage,  entombed  with  a  Northern 
spade,  and  memorized  with  a  Northern  slab!" 

We  shall  see  in  the  following  sections,  reviewing  the  course 
of  tariff  policy,  that  the  North  and  the  South  took  opposite 
sides  with  respect  to  the  protective  tariff.  The  South,  which 
had  practically  no  manufactures,  desired  free  trade,  that  it 
might  make  its  purchases  in  the  cheapest  market,  while  the 
North  desired  protection  for  its  growing  manufactures. 

655.  Beginning  of  the  system  of  protective  tariffs,  1816.  — 
In  previous  sections  (609-611)  attention  was  directed  to  the 
fact  that  the  earliest  tariffs  were  but  slightly  protective.    The 


546  A  HISTORY  OF  COMMERCE 

establishment  of  manufactures  was  stimulated  much  more  by 
the  interruption  of  commerce  at  the  time  of  the  embargo  and 
of  the  war  with  England  than  by  any  deliberate  policy  of 
protection.  At  the  close  of  the  war  of  1812,  however,  the  time 
seemed  to  have  come  for  the  legislators  to  intervene  in  favor 
of  American  manufacturing  industries.  The  privations  of  the 
war  period  awakened  people  to  the  dependence  of  the  United 
States  on  Europe,  which  seemed  unworthy  of  a  free  state  and 
which  seemed  unsafe  from  the  military  standpoint.  The  manu- 
factures which  had  grown  up  during  the  war  were  exposed,  at 
the  return  of  peace,  to  a  flood  of  imports  which  threatened 
to  reconquer  the  American  market  for  the  foreign  manufacturer. 
The  tariff  of  1816,  therefore,  included  a  number  of  duties 
designed  to  restrict  imports  for  the  benefit  of  the  American 
producer;  the  scale  of  duties  was  moderate,  the  highest  per- 
manent duty  being  20  per  cent. 

656.  Course  of  tariff  policy,  1816-1860.  —  The  conflict  of 
interests  between  different  sections  of  the  country  led  to 
many  changes  in  the  tariff  schedules,  and  occasioned  some 
bitter  political  contests.  Without  attempting  to  recount  the 
details,  it  may  be  said  in  summary  that  the  course  of  the  ten- 
dency was  toward  higher  duties  till  about  1830,  when  some 
of  the  duties  amounted  to  40  per  cent  and  50  per  cent  or  more. 

The  high  duties  were  particularly  obnoxious  to  Southerners, 
who  considered  them  a  tax  taken  from  their  pockets  for  the 
benefit  of  the  North,  and  who  fought  persistently  for  a  reduc- 
tion. They  finally  secured  a  hearing;  and  duties  were  steadily 
reduced  in  the  period  from  1833  to  1842  until  they  stood,  at 
the  later  date,  at  a  general  level  of  20  per  cent.  The  tariff 
remained  at  this  low  level  only  two  months,  when  it  gave 
place  to  another  tariff  with  higher  duties;  the  average  of  the 
duties  levied  ad  valorem  was  33  per  cent,  while  some  duties 
rose  far  above  this  rate.  Finally,  from  1846  until  the  Civil 
War,  the  country  was  under  a  low  tariff;  duties  were  reduced 
until  the  maximum  protective  duty  was  24  per  cent,  while 
the  general  level  was  about  20  per  cent. 


IMPORTS,   DIRECTION  OF  COMMERCE,  1850-1860      547 

657.  Effect  of  the  tariff  on  industrial  development.  —  What 
effect  did  the  tariff  policy  have  upon  the  industries  and  the 
commerce  of  the  country?     To  this  question  the  only  safe 
answer  is  that  the  effect  of  the  tariff  was  much  less,  for  good 
or  for  bad,  than  has  commonly  been  stated  by  writers  on 
either  side  of  the  controversy  between  protection  and  free 
trade.     The  country  has  grown  rich  from  the  wealth  of  its 
natural  resources  and  the  character  of  its  people.    The  tariff 
diverted  into  manufacturing  more  people  than  would  otherwise 
have  chosen  that  branch  of  production,  but  it  did  not  succeed 
in  making  them  all  prosperous.     Manufactures  which  were 
suited  to  the  conditions  of  the  time,  as  the  cotton  manufac- 
ture, grew  strong  under  the  tariff,  and  would  have  grown  strong 
without  it;    other  manufactures,  such  as  those  of  iron  and 
wool,  were  still  feeble  after  years  of  protection.     Commerce 
must  have  felt  the  effect  of  the  tariff,  for  protection  could  be 
effective  only  as  it  restricted  the  exchange  of  wares  with 
foreign  countries.      We  are  tempted  to  ascribe  the  rapid  in- 
crease in  imports  and  exports  after  1846  to  the  reduction  in 
duties.     Yet,  even  here,  many  other  influences   favored  the 
growth  of  our  foreign  trade,  and  it  is  impossible  to  determine 
which  of  them  all  was  most  effective. 

658.  Changes  in  the  relative  importance  of  shipping  ports ; 
southern  ports  and  the  export  trade.  —  In  the  course  of  this 
period  the  development  of  new  land  in  the  West  and  South- 
west, and  the  rise  in  importance  of  the  cotton  crop,  effected 
some  notable  changes  in  the  relative  rank  of  the  ports  of  the 
country.    Measuring  importance  by  the  value  of  the  domestic 
exports,  we  find  that  New  York  now  held  the  first  place;  this 
port  was  in  1860  the  shipping  point  for  nearly  one  third  of 
the  total  export  values  of  the  country.    A  considerable  part 
of  the  value  of  exports  from  New  York,  however,  was  formed 
of  precious  metals,   attracted  there  by  the  banks  and  the 
facilities  for  rapid  voyages  on  passenger  vessels.     If  we  con- 
fine ourselves  to  the  shipment  of  ordinary  merchandise,  we  find 
that  New  York,  in  spite  of  the  western  connections  afforded 


548  A  HISTORY  OF  COMMERCE 

by  the  railroads  and  the  Erie  Canal,  took  second  place,  showing 
but  two  thirds  of  the  export  values  leaving  the  country  by 
way  of  New  Orleans.  This  port  was  the  natural  outlet  for 
the  cotton-growing  country  of  the  lower  Mississippi  valley,  and 
its  export  of  the  one  ware,  cotton,  exceeded  in  value  all  the 
merchandise  shipped  from  New  York.  It  was  cotton,  again, 
that  gave  standing  to  the  ports  next  in  rank,  Mobile,  Charleston, 
and  Savannah;  the  exports  from  these  cities,  aside  from  that 
single  staple,  were  insignificant.  Old  ports  like  Boston  and 
Baltimore  had  sunk  to  the  sixth  and  seventh  place,  while 
Philadelphia,  once  the  leader,  was  still  lower  on  the  list,  and 
was  outranked  by  San  Francisco,  if  the  gold  shipments  from 
that  port  be  counted. 

659.  Northern  ports  and  the  import  trade.  —  The  reader  who 
remembers  what  has  been  said  above  about  the  triangular 
course  of  trade  in  this  period  will  not  be  surprised  to  learn 
that  the  figures  of  imports  tell  a  very  different  story.     New 
York  enjoyed  an  import  trade  nearly  double  that  of  all  the 
other  ports  of  the  country  together;  it  was  the  great  distributing 
point  for  European  manufactures,   from  which  the  various 
ports  of  the  country  secured  most  of  their  supply.    Second  in 
rank,   but  separated  by  an  immense  interval,   was  another 
northern  port,  Boston;    while  New  Orleans  was  but  a  poor 
third,  and  Philadelphia  and  Baltimore  followed  in  the  order 
named.     Other  southern  ports,  ranking  high  in  the  value  of 
their  exports,  had  only  an  inconsiderable  import  trade. 

660.  Changes  in  the  direction  of  trade.    New  character  of 
the  trade  with  England.  —  There  had  been  changes  also  in  the 
direction  of  our  trade  abroad.    The  following  brief  table  gives 
figures  in  round  millions,  for  1860,  which  may  be  compared 
with  the  figures  for  1790  given  in  section  586. 

It  will  be  noted  that  our  trade  with  English-speaking  people 
formed  still  the  most  important  part  of  our  total  commerce.  A 
noteworthy  change  had  taken  place,  however,  in  our  trade  with 
the  British  possessions.  At  any  earlier  period  we  imported 
from  them  far  more  than  we  could  sell  to  them  in  return;  the 


IMPORTS,   DIRECTION  OF  COMMERCE,   1815-1860      549 


Exports 

Imports 

Great  Britain  and  her  dominions  

228 

177 

Including  Canada  

11 

18 

British  West  Indies  

5 

1 

France  and  her  dominions  

57 

43 

Spain  and  her  dominions  

20 

44 

Including  Cuba  

11 

34 

balance  of  trade  was  against  us,  as  men  said.  This  condition 
had  been  reversed  by  the  rise  of  the  cotton  trade,  and  was  to 
be  still  further  affected  by  our  export  of  foodstuffs.  Great 
Britain  was  now  dependent  on  us  for  the  raw  material  of  her 
most  important  manufacture,  and  was  seeking  from  us  also 
increasing  supply  of  food,  for  her  factory  population. 

661.  Trade  with  Canada  and  the  West  Indies.  —  Our  trade 
with  Canada  was  of  comparatively  recent  growth.    Restrictive 
duties    had   formerly    checked    exchange   with   our   northern 
neighbor,  but  as  population  and  industries  developed  on  either 
side  of  the  frontier  a  demand  for  greater  freedom  of  exchange 
made  itself  felt;   duties  were  reduced,  a  reciprocity  treaty  was 
negotiated  (1854),  and  under  it  many  articles  were  exchanged 
free  of  all  duties. 

It  will  be  noted  that  trade  with  the  British  West  Indies 
had  not  developed  to  a  similar  degree;  and  it  would  be  ap- 
parent, if  other  figures  were  included  in  the  table,  that  our 
West  India  trade  in  general  was  far  less  important  than  it 
had  been  in  the  earlier  period  of  our  history.  Trade  with  the 
French  and  the  Dutch  West  Indies  was,  in  fact,  less  in  1860 
than  in  1790.  Among  all  the  West  India  islands  Cuba  alone 
was  a  prominent  exception  to  this  tendency  to  decline.  Slavery 
was  still  maintained  in  that  island;  and  the  sugar  industry, 
which  had  felt  severely  in  other  islands  the  abolition  of  slavery, 
continued  to  flourish  there. 

662.  Expansion  of  American  commerce  in  Europe,  South 
America,  and  the  Far  East.  —  It  may  be  said,  in  general,  that 


550  A   HISTORY  OF  COMMERCE 

our  commerce  had  broken  through  the  rather  narrow  bounds 
which  had  formerly  directed  so  much  of  it  to  England  and  to 
the  West  Indies.  We  were  building  up  our  trade  with  the 
continent  of  Europe.  Our  trade  with  France  had  increased 
greatly  under  the  liberal  commercial  policy  of  Napoleon  III, 
and  we  were  establishing  profitable  connections  with  other 
European  states,  as  is  shown  by  the  following  figures  for  our 
total  trade  with  them  in  1860  (millions  of  dollars):  German 
states  33,  the  Netherlands  10,  Italian  states  9. 

Still  more  noteworthy  is  the  extension  of  our  commerce 
to  the  South  and  to  the  Far  East.  During  the  period  under 
review  the  states  of  Central  and  South  America  had  won  their 
independence  from  Europe,  and  were  now  free  to  establish 
such  trade  relations  as  they  chose.  With  Mexico  and  various 
states  of  South  America  (especially  Brazil  and  the  Argentine 
Republic)  we  had  in  1860  a  commerce  amounting  to  about 
sixty  million  dollars.  Our  trade  with  China  amounted  to 
about  twenty  million;  and  while  our  trade  with  Japan  (about 
$150,000)  gave  no  immediate  reward  for  the  American  enter- 
prise which  had  opened  the  ports  of  that  country,  it  was  at 
least  a  promise  for  the  future. 

QUESTIONS  AND  TOPICS 

1.  See  sect.  695  for  figures  of  imports  which  may  be  charted  for 
comparison  with  later  development. 

2.  How  did  the  import  trade  of  the  U.  S.  compare  with  that  of  Eng- 
land  at   about  this   time? 

3.  Why  was  it  cheaper  for  the  Americans  to  buy  manufactures 
abroad  than  to  make  them  at  home? 

4.  What  is  the  effect  of  a  protective  tariff,  (a)  on  commerce,  (6)  on 
production,  (c)  on  the  price  of  the  product? 

5.  Industrial  development,  1790-1860.    [Wright,  132-142.] 

6.  American  coal  fields.    [Nicolls,  part  1;   commercial  geographies.] 

7.  Early  transportations  of  coal  by  rivers  and  canals.    [Nicolls,  chaps. 
17,  18.] 

8.  Assuming  that  the  protective  duty  on  iron  raised  its  price  to  pur- 
chasers, what  must  have  been  the  effect  on  manufactures  and  transporta- 
tion?   [Compare  the  sections  on  Russia,  above.] 


IMPORTS,   DIRECTION  OF  COMMERCE,   1815-1860     551 

9.  Development  of  the  American  iron  industry  before  1860.    [Taussig; 
Depew,  chap.  46  by  Huston;    Swank.] 

10.  Difficulties  of  the  woolen  manufacturer.     [Taussig;    North  in 
Depew,  p.  482.] 

11.  Contributions  of  the  U.  S.  to  improvements  in  machine  tools. 
[Depew,  chap.  49  by  Sellers.] 

12.  Cotton  manufactures  in  the  South  before  the  war.    [DeBow,  1: 
233,  2:  101  ff.,  3:  24  ff.]. 

13.  Industrial  conditions  at  the  close  of  the  War  of  1812.    [Histories 
of  U.  S.  by  McMaster  and  Henry  Adams.] 

14.  Tariff  of  1816.    [Taussig.] 

15.  Why  was  the  South  opposed  to  protection  in  this  period?    [Re- 
view the  description  of  the  industries  and  commerce  of  North  and  South, 
and  try  to  see  what  effect  a  protective  duty  on  manufactured  wares  would 
have  on  Southerners.] 

16.  Study  in  detail  the  influences,  economic  and  political,  deter- 
mining the  character  of  one  of  the  following  tariff  acts:   1824,  1828,  1832, 
1833,  1842,  1846,  1857.    [Tariff  histories  by  Taussig  and  others;  narrative 
histories  of  the  U.  S.] 

17.  Study  the  commercial  history  of  one  of  the  ports  named,  sects. 
645-6.     [Local  histories;    Encyclopedias.] 

18.  Commerce  of  the  South  before  the  War.     [Maury  in  DeBow, 
vol.  3,  Iff.] 

19.  Reviewing  the  list  of  ports,  which  of  the  following  factors  seems 
to  have  been  most  important  in  determining  their  relative  rank  in  the 
import  trade:   nearness  to  Europe,  excellence  of  harbor,  facilities  for  dis- 
tributing goods  by  waterways,  railroad  facilities?     Can  you  add  other 
factors  of  importance  to  the  list? 

20.  Make  a  chart  of  the  figures,  sect.  660,  and  compare  it  with  the 
chart  for  the  earlier  period. 

21.  Effect  on  commerce  with  Canada  of  the  reciprocity  treaty  of 
1854.     [Haynes,  Robinson.] 

22.  History  of  the  commerce  between  the  United  States  and  South 
America.    [Rutter;  Curtis  in  Senate  Exec,  doc.,  first  session,  51st  Cong., 
vol.  8;    check  list  2685.] 

23.  Development  of  American  commerce  in  the  Pacific.     [Callahan.] 

BIBLIOGRAPHY 
See  chapter  xlviii. 


CHAPTER   LI 


NATIONAL   DEVELOPMENT,   1860-1914 

663.  Survey  of  commercial  development,  1860-1914.  —  In 

the  chapters  introductory  to  the  history  of  commerce  in  the 
nineteenth  century,  attention  was  directed  to  the  increasing 
rapidity  of  movement,  which  makes  the  second  half  of  the 
century  a  period  by  itself,  distinguished  above  all  others  by 
its  wonderful  commercial  development.  That  the  United 
States  enjoyed  a  full  measure  of  the  world's  progress  in  com- 
merce is  shown  by  the  following  table,  which  gives  the  figures 
of  imports  and  exports  in  millions  of  dollars. 


Imports 

Domestic 
exports 

Foreign 
exports 

Total 
general 

I860  

534 

316 

17 

687 

1870  

436 

377 

16 

829 

1880   

668 

824 

12 

1,504 

1890  

789 

845 

13 

1,647 

1900  

850 

1,371 

24 

2,244 

1910  

1,557 

1,710 

35 

3,302 

1913  

1,813 

2,429 

37 

4,279 

Prices  were  falling  in  the  last  quarter  of  the  century,  so  that 
the  figures  in  the  text,  giving  the  value  of  imports  and  exports, 
do  not  do  justice  to  the  growth  in  the  physical  volume  of  trade. 
On  the  other  hand  prices  began  to  rise  just  before  1900  and, 
therefore,  the  figures  exaggerate  the  increase  of  trade  in  the 
most  recent  period.  Prices  of  1913  were,  however,  only  about 
one-third  higher  than  in  the  decade  1890-99  so  that  after 

552 


NATIONAL  DEVELOPMENT,   1860-1914  553 

allowance  is  made  for  their  rise  the  growth  of  American  com- 
merce in  this  period  remains  extraordinary. 

664.  Internal  development  of  the  country.  —  During  this 
period  the  natural  growth  of  population  was  augmented  by  a 
steady  stream  of  immigration,  which  has  increased  with  time 
and  has  made  to  appear  small  in  comparison  all  previous 
movements  of  people  to  the  country.     In  spite,  however,  of 
this  growth,  the  increase  in  the  value  of  foreign  trade  has 
been  even  more  rapid,  and  the  share  contributed  by  the  average 
person  to  the  commerce  of  the  country  was  greater  at  the 
close  of  the  century  than  at  any  previous  period.    The  average 
inhabitant  had  in  1913  a  share  of  about  $18  in  the  imports, 
and  of  about  $25  in  the  exports. 

While  the  preceding  period  was  called  the  period  of  national 
expansion,  the  period  lasting  from  the  Civil  War  to  the  close 
of  the  century  may  fitly  be  termed  that  of  national  develop- 
ment. The  population  continued,  it  is  true,  to  spread  out 
within  the  national  frontiers.  It  occupied  the  great  plains 
leading  up  to  the  Rocky  Mountains  region,  and  the  strip  of 
fertile  land  along  the  Pacific  Coast,  and  penetrated  the  moun- 
tains and  semi-arid  region  in  all  parts  where  mineral  wealth 
and  agricultural  possibilities  promised  returns  to  the  laborer. 
The  most  striking  feature,  however,  in  the  progress  of  the  last 
forty  years  has  been  not  so  much  the  breaking-in  of  new 
territory  as  the  improved  means  adopted  for  making  the  most 
of  all  resources,  in  old  and  new  territory  alike.  Improvements 
of  a  technical  character  have  transformed  the  methods  of 
transportation  and  manufacture,  and  new  methods  of  cooper- 
ation have  changed  the  aspects  of  business  life  completely. 

The  first  subject  requiring  attention  is  the  development  of 
the  transportation  system. 

665.  Extension  of  railroads.  —  In  the  recent  history  of  the 
transportation  system  of  the  United  States  the  most  noteworthy 
feature  has  been,  of  course,  the  development  of  railroads.    The 
railroad  mileage  of  the  country  in  1860  was  divided  almost 
equally  between  the  North,  the  South,  and  the  West,  each 


554  A   HISTORY  OF  COMMERCE 

section  having  roughly  10,000  miles.  The  section  which  felt 
most  keenly  the  need  of  increased  railroad  facilities  was  the 
agricultural  West,  where  the  products  of  rich  farm  lands  were 
wasted  and  where  corn  was  not  infrequently  used  for  fuel,  for 
lack  of  means  to  reach  a  market.  After  1860  the  railroads 
were  rapidly  extended  through  the  upper  Mississippi  Valley, 
and  in  1869  the  first  transcontinental  route  was  completed 
(Union  and  Central  Pacific).  Railroads  reaching  out  like 
feelers  into  new  regions  attracted  population  and  stimulated 
traffic  not  only  in  the  new  country  but  also  in  the  older  settled 
districts,  where  the  opportunities  for  profitable  business  were 
multiplied  by  the  increased  supply  of  raw  materials  and  by 
the  widened  market  for  finished  products.  Old  lines  were 
extended  and  new  lines  were  built  until,  in  1913,  the  mileage 
of  the  country  had  risen  from  about  30,000  as  it  was  in 
1860,  to  over  250,000,  showing  an  average  gain  of  about 
40,000  miles  in  a  decade,  a  greater  amount  than  the  total  of 
1860. 

666.  Improvements  in  the  operation  of  railroads.  —  Equal 
in  practical  importance  to  the  extension  of  the  railroad  system 
were  the  improvements  effected  during  the  period  in  the  con- 
struction and  operation  of  the  lines.  This  was  the  time  in 
which  steel  rails  and  bridges  were  introduced,  which  permitted 
the  use  of  more  efficient  locomotives,  drawing  heavier  trains, 
and  so  reducing  the  expense  of  carriage.  Lines  which  had 
been  constructed  in  short  sections  under  the  control  of  different 
companies  were  now  merged  in  great  corporations,  operating 
thousands  of  miles  of  track.  The  railroads  had  previously 
been  so  independent  of  each  other  that  there  was  not  even  a 
standard  gage  for  the  track;  some  lines  set  the  rails  6  or  even 
7  feet  apart,  a  California  law  fixed  the  gage  in  that  State  at 
5  feet,  while  the  Missouri  Pacific  had  a  gage  of  5  feet  6  inches. 
A  difference  in  gage  necessitated,  of  course,  the  unloading  and 
reloading  of  wares  in  passage  from  one  line  to  another,  and  pro- 
hibited distant  freight  movements.  Soon  after  1860  a  move- 
ment toward  the  present  standard,  4  feet  8|  inches,  brought 


NATIONAL  DEVELOPMENT,   1860-1914  555 

a  uniform  gage  into  use,  and  when  the  consolidation  of  rail- 
roads was  under  way  there  was  no  longer  a  thought  of  varying 
from  the  standard.  The  first  consolidation  of  a  through  line 
from  Chicago  to  the  sea  was  effected  in  1869  under  the  man- 
agement of  Cornelius  Vanderbilt  (Lake  Shore  and  Michigan 
Southern  and  New  York  Central  and  Hudson  River) ;  and  the 
movement  soon  spread  to  other  lines  (Pennsylvania,  etc.). 
The  benefits  were  greater  than  the  reader  may  be  inclined  to 
suppose.  The  management  of  railroads  was  made  at  the  same 
time  more  efficient  and  less  expensive;  uniformity  of  policy 
was  established  in  such  matters  as  the  track  gage;  and,  most 
important,  a  new  policy  of  freight  rates,  designed  to  stimulate 
distant  shipments,  became  practicable. 

667.  Reduction  of  railroad  rates.  —  The  charges  for  freight 
movements  before  1860  rarely  fell  below  2  cents  per  ton-mile. 
Railroad  managers  believed  that  the  lowest  rates  which  they 
could  profitably  make  were,  roughly,  2  cents  for  heavy  agricul- 
tural produce,  3  for  groceries,  4  for  dry  goods.    The  improve- 
ments effected  in  road-bed  and  rolling  stock  after  1860  suggested 
the  possibility  of  reducing  rates,  and  the  reorganization  of  small 
railroads  in  large  systems  made  it  possible  to  institute  reduc- 
tions to  stimulate  distant  freight  movements.     The  results 
exceeded  all  expectations.    The  railroads  found  that  a  reduc- 
tion brought  such  an  increase  of  traffic  that  the  lower  rates 
were  not  only  an  advantage  to  the  shippers,  but  also  a  benefit 
to  themselves;   and  rates  have  fallen  almost  constantly  in  the 
course  of  the  period.    In  1914  the  average  freight  rate  was  only 
three  quarters  of  a  cent  per  ton-mile,  and  some  of  the  lines 
between  Chicago  and  the  Atlantic  coast  had  reduced  their 
charges  very  close  to  half  a  cent. 

668.  Contribution  of  the  railroads  to  recent  national  devel- 
opment. —  The  importance  of  this  change  in  a  country  of  great 
distances  can  scarcely  be  exaggerated.    It  has  transformed  the 
railroad  from  a  luxury  for  the  use  of  passengers  and  high-class 
freight  to  a  necessity  for  the  producers  and  consumers  of  the 
commonest  articles.     In  1860  even  a  ware  like  wheat  could 


556 


A   HISTORY  OF  COMMERCE 


not  pay  the  expense  of  transportation  over  a  distance  exceeding 
many  hundred  miles,  and  distant  freight  traffic  was  restricted 
to  manufactures  and  the  most  valuable  of  farm  products,  such 
as  live  stock.  The  reduction  in  charges  has  opened  a  profitable 
market  for  the  commonest  agricultural  products  of  distant 
western  States,  and  has  made  accessible  the  natural  resources 
of  all  kinds,  which  otherwise  would  count  for  nothing  among 
the  economic  assets  of  the  country.  In  1913  more  than  half 
of  the  tonnage  carried  on  the  railways  of  the  United  States 
consisted  of  ores,  coal,  and  other  products  of  mines,  which 
could  scarcely  have  been  carried  at  all  in  1860.  The  railroads 
now  carry  a  tonnage  far  exceeding  that  transported  through 
other  channels  (rivers,  lakes,  canals,  and  coasting  trade);  and 
it  may  be  said  in  sober  earnest  that  a  considerable  proportion 
of  the  people  in  the  country  would  starve,  without  the  means 
of  earning  a  livelihood,  if  the  railroad  improvements  that  have 
come  since  1860  were  suddenly  swept  away. 

Some  idea  of  the  growth  of  railroad  service  in  the  United 
States  in  recent  years  can  be  gained  from  the  accompanying 
brief  table,  which  pictures  the  contribution  of  the  railroads  in 
their  two  important  activities,  the  carriage  of  freight  and  the 
carriage  of  passengers. 

RAILKOAD  SERVICE  IN  THE  U.S.,  1890-1910 
(Figures  in  milliards:  000,000,000  omitted) 


1890 

1895 

1900 

1905 

1910 

Tons  carried  one  mile  

77 

85 

141 

186 

255 

Passengers  carried  one  mile  

11 

12 

16 

23 

32 

669.  Relative  decline  in  transportation  by  canals  and  rivers. 
—  The  development  of  the  railroad  system  has  not  entirely 
done  away  with  the  previous  systems  of  internal  transportation, 
but  it  has  reduced  them  to  subordinate  importance.  The 
decline  is  especially  noticeable  in  the  case  of  canals.  Even  in 


NATIONAL  DEVELOPMENT,   1860-1914  557 

1880  nearly  half  of  the  total  canal  mileage  had  been  abandoned 
and  a  large  number  of  the  canals  remaining  in  operation  were 
not  paying  expenses.  The  cost  of  transportation  on  the  canals 
has  been  reduced  by  deepening  them  to  take  in  larger  boats; 
tolls  have  been  entirely  abolished,  as  in  the  case  of  the  Erie 
Canal ;  and  still  the  superior  speed  and  certainty  of  transporta- 
tion by  rail  have  robbed  the  canals  of  the  bulk  of  the  traffic. 
Some  of  the  river  routes  have  fared  better.  The  Mississippi 
River  system,  notably,  is  still  an  important  channel  of  trade, 
but  even  in  the  territory  it  serves  the  railroads  far  outrank 
it  in  importance,  and  most  of  the  inland  waterways  have  lost 
their  previous  significance. 

670.  Importance  of  the  Great  Lakes ;  St.  Mary's  Canal.  — 
While  the  country  could  now  renounce,  without  very  serious 
loss,  the  rivers  and  canals  which  were  formerly  so  important 
as  means  of  transportation,  it  could  ill  afford  to  dispense  with 
the  Great  Lakes  along  its  northern  boundary.  In  the  first 
half  of  the  century  Lake  Erie  was  a  useful  means  of  commu- 
nication with  the  growing  States  of  the  West,  and  gained 
greatly  in  importance  with  the  construction  of  canals  after 
1825.  It  was  not  until  the  second  half  of  the  century,  how- 
ever, that  the  three  western  lakes  showed  their  possibilities  as 
channels  through  which  the  national  resources  might  be  con- 
ducted to  districts  where  they  could  be  best  utilized.  Between 
1860  and  1900  the  tonnage  on  the  Great  Lakes  grew  sixfold, 
and  increased  even  more  in  carrying  capacity  as  wooden  sailing 
vessels  gave  place  to  large  steel  steamers.  Freight  rates  have 
fallen  below  one  tenth  of  a  cent  per  ton-mile,  and  immense 
amounts  of  ore,  coal,  grain,  and  lumber  have  thus  found  a 
cheap  means  of  access  to  market. 

In  1855  a  canal  was  completed  to  avoid  the  rapids  in 
St.  Mary's  River  at  the  outlet  of  Lake  Superior,  and  this  canal, 
since  deepened  and  improved,  has  become  one  of  the  great 
commercial  channels  of  the  world.  The  Lake  Superior  region 
has  proved  to  be  wonderfully  rich  in  iron,  copper,  timber,  and 
other  products  essential  to  modern  industry.  In  1913  the  ton- 


558  A  HISTORY  OF  COMMERCE 

nage  of  vessels  passing  through  the  St.  Mary's  Canal  was 
greater  than  the  tonnage  entering  the  seaports  of  the  United 
States  from  all  foreign  countries,  and  was  more  than  double 
the  tonnage  passing  through  the  Suez  Canal. 

671.  Decline  of  American  shipping.  —  In  contrast  with  the 
great  development  of  the  means  of  internal  transportation  we 
have  to  note,  in  this  period,  a  decided  decline  in  the  American 
shipping  engaged  in  foreign  trade.    The  total  tonnage  of  the 
country  was  in  1913  nearly  double  what  it  had  been  in  1860, 
and  entitled  the  United  States  to  a  position  high  up  among 
trading  countries.     About  one  third  of  this  total,  however, 
was  employed  on  the  Great  Lakes,  and  most  of  the  remainder 
was  engaged  in  the  coasting  trade.    Both  of  these  branches  of 
navigation  could  be,  and  were,  protected  by  law  against  the 
competition  of  foreign  ship-owners.    The  trade  of  this  country 
with  other  countries,   however,   could   not  be  restricted   to 
American  vessels  without  danger  of  retaliation;    and  the  at- 
tempts of  the  United  States  to  favor  its  own  vessels  in  foreign 
trade,  by  taxing  foreign  vessels  at  the  port  of  entry,  had  been 
given  up  before  1860.     Now  in  this  branch  of  shipping,  in 
which  the  vessels  of  all  countries  of  the  world  compete  on  equal 
terms,  the  tonnage  of  the  United  States  declined  from  2.5 
million  in  1860  to  1.0  in  1913. 

672.  Effect  of  the  Civil  War  on  the  merchant  marine. — 
Of  this  great  loss  in  tonnage  the  larger  part  fell  in  the  years 
immediately  following  1860,  the  period  of  the  Civil  War.    The 
southern  States,  unable  to  break  the  blockade  which  closed 
their  ports  and  prevented  the  sale  of  their  cotton,  sought  to 
retaliate  by  loosing  swift  cruisers  to  prey  on  the  ships  which 
sailed  under  the  United  States  flag.    The  most  celebrated  of 
these  cruisers,  the  Alabama,  was  fitted  out  in  England,  and 
for  two  years,  until  its  destruction  by  the  Kearsarge  in  1864, 
haunted  the  chief  routes  of  trade,  and  captured  no  less  than 
69  vessels.    Other  cruisers  were  less  successful,  but  altogether 
261  Northern  vessels  were  taken.    The  fear  of  capture  caused 
a  decline  in  tonnage  far  greater  than  the  actual  losses  at  sea; 


NATIONAL  DEVELOPMENT,   1860-1914  559 

American  ship-owners  found  their  profits  eaten  up  by  heavy 
insurance  charges,  and  sold  their  vessels  to  foreigners,  who' 
could  navigate  them  in  safety  under  a  neutral  flag.  Altogether 
the  country  came  out  of  the  war  with  about  a  million  tons  of 
shipping  less  than  it  had  owned  at  the  beginning. 

673.  Other  causes  of  decline.  —  The  American  merchant 
marine  would  have  recovered  from  the  losses  of  the  war  but 
for  other  difficulties  which  it  faced.     This  was  the  period  in 
which  steamers  began  to  gain  rapidly  on  sailing  ships,  and 
in  which  iron  began  to  be  extensively  used  in  ship-building. 
The  Americans  had  at  this  tune  neither  the  resources  nor  the 
experience  to  compete  with  the  English  in  the  new  forms  of 
naval  construction,  and  even  before  the  war  it  was  apparent 
that  the  English  were  drawing  ahead.    Moreover,  the  war  had, 
indirectly,    a   great   influence   on   the  fortunes   of  American 
shipping,  for  it  led  to  a  great  increase  in  the  tariff  and  to  heavy 
taxes  of  all  kinds.    It  cost  more  both  to  build  and  to  navigate 
an  American  ship  than  it  had  cost  before  the  war  or  than  it 
cost  an  English  owner.    Add  to  these  influences  the  fact  that 
the  country  was  just  entering  the  period  of  great  railroad 
extension,  and  that  the  West  now  offered  wonderful  opportu- 
nities for  the  investment  both  of  labor  and  capital;    and  it  is 
not  surprising  that  the  American  people  turned  from  the  sea 
to  the  land,  and  resigned  the  high  position  which  they  had 
formerly  held  in  foreign  carrying-trade. 

674.  Recent  position   of   the   merchant   marine.  —  Since 
1860,  therefore,   the  United  States  has  relied  mainly  upon 
foreigners  to  carry  its  freight  across  the  seas.    Of  the  tonnage 
that  cleared  from  ports  of  the  United  States  for  foreign  coun- 
tries in  1913  about  one  quarter  sailed  under  the  American  flag. 
The  effective  service  of  American  ships  did  not,  however,  cor- 
respond to  this  proportion;  they  carried  only  about  one-tenth 
in  value  of  the  exports  that  went  out  by  sea.    Various  attempts 
have  been  made  to  stimulate  the  construction  and  navigation 
of  American  ships  by  the  grant  of  subsidies  from  the  national 
government,  but  the  success  has  been  very  moderate,  and  the 


560  A   HISTORY  OF  COMMERCE 

people  have  been  in  general  unwilling  to  levy  taxes  for  the 
support  of  this  particular  industry.  In  one  respect  legislation 
has  become  more  liberal;  the  Panama  Canal  Act  of  1912  made 
it  at  last  possible,  under  somewhat  severe  restrictions,  to  register 
under  the  American  flag  foreign  built  vessels  engaged  in  foreign 
trade. 

675.  Development  of  national  manufactures.  —  Part  of  the 
energy  diverted  from  the  sea  found  a  fruitful  field  of  labor  in 
the  developing  manufactures  of  the  country .     The  period  from 
1860  to  1914  marked  the  advance  beyond  the  age  of  trial  and 
experiment  in  the  history  of  American  manufactures;    at  the 
close  of  this  period  the  United  States  was  the  greatest  manu- 
facturing country  of  the  world,   supplying  most  of  its  own 
requirements  for  manufactured  wares,  and  producing  a  large 
surplus  for  export  to  other  countries.     The  development  of 
the  transportation  system  was  the  indispensable  condition  of 
this  progress.     The  railroads  have  brought  all  parts  of  our 
great  national  domain  so  closely  together,  in  a  commercial 
sense,  that  the  choicest  natural  resources  of  the  continent  have 
been  made  available  at  the  centers  of  production.    Abundant 
labor  has  been  supplied  both  by  the  growth  of  the  native 
population  and  by  the  increasing  flow  of  immigrants.    Leaders 
have  arisen  from  the  people,   stimulated  to  energy  by  the 
rapid  promotion  which  has  been  granted  on  proof  of  signal 
ability;    and  the  necessary  capital  has  been  contributed  by 
investors  in  all  parts  of  the  world,  who  have  sought  eagerly 
the  opportunity  to  share  in  our  industrial  gains.    Finally,  our 
factories  have  enjoyed   an  advantage  beyond  those  of  any 
country,  in  the  great  market  which  has  stood  waiting  to  receive 
their  products.     Within  boundaries,  each  of  which  measures 
thousands  of  miles,  lay  an  area  absolutely  free  to  trade,  provided 
with  the  most  efficient  instruments  of  transportation  and  com- 
munication, and  settled  by  a  people  numbering  nearly  a  hundred 
million,  of  prosperous  producers  and  educated  consumers. 

676.  Coal  production  and  the  use  of  steam  power.  —  Not 
until  this  period  did  the  country  realize  the  full  value  of  its 


NATIONAL  DEVELOPMENT,   1860-1914  561 

hidden  mineral  wealth.  The  coal  deposits  of  the  United  States 
are  thought  to  be  richer  than  those  of  any  other  whole  conti- 
nent, and  the  Ohio  Valley  has  coal  mines  together  with  iron 
deposits  and  rich  agricultural  resources  in  a  combination  which 
is  unmatched.  The  coal  production  of  1860  (13  million  tons'! 
was  considerably  larger  than  in  previous  decades,  but  it  seems 
insignificant  in  comparison  with  240  million  of  1900,  or  the 
509  million  of  1913.  Bituminous  coal,  the  kind  chiefly  used 
in  manufactures,  formed  only  one  third  of  the  total  output 
in  1850  and  only  one  half  even  in  1870,  while  in  1913  it  com- 
prised four  fifths  of  the  whole.  In  coal  production  the  United 
States  now  led  the  world. 

The  vast  increase  in  the  coal  product  was  used  in  innumer- 
able ways,  but  it  found  its  chief  employment  in  furnishing 
motive  power  to  the  transportation  system,  and  to  the  factories 
of  the  country.  In  studying  the  history  of  coal  production  one 
is  inclined  to  say  that  the  country  did  not  really  enter  the  age 
of  steam  until  after  the  Civil  War.  The  total  horse-power 
employed  in  manufactures  in  1869  (2.3  million),  was  derived 
from  steam  and  water  in  almost  equal  proportion.  In  the  period 
closing  in  1914  the  power  employed  increased  about  ten-fold 
(to  22.5  million),  and  of  the  increase  steam  supplied  nearly 
three-quarters. 

677.  Machinery.  —  That  the  Civil  War  really  marks  a 
dividing  line  in  our  industrial  progress  is  shown  by  the  history 
of  the  Patent  Office;  within  a  few  years  after  the  close  of  the 
war  the  number  of  patents  granted  increased  greatly,  and  the 
new  level  thus  established  was  steadily  maintained.  American 
machine  manufacturers  made  in  this  period  their  great  con- 
tributions to  mechanical  progress:  the  system  of  interchangeable 
parts,  automatic  and  specialized  machines,  the  utilization  of 
by-products,  etc.  Brass  screws  at  one  time  could  be  pro- 
duced only  at  great  expense;  it  is  characteristic  that  some 
manufacturers  would  now  make  them  absolutely  free  of  charge, 
if  the  customer  would  furnish  the  brass  rod  and  would  allow 
them  to  keep  the  chips  of  brass  which  were  cut  off  in  the  process. 


562  A   HISTORY  OF  COMMERCE 

It  is  impossible  here  to  trace  the  history  of  manufactures 
in  detail,  but  a  single  manufacture,  that  of  carpets,  may  be 
taken  for  illustration.  In  the  carpet  industry  about  1835 
modern  factory  methods  were  unknown;  weavers  worked  at 
home  with  old-fashioned  hand  looms,  producing  7  or  8  yards 
of  inferior  carpet  per  day.  Power  looms  were  invented,  and 
were  introduced  little  by  little,  but  even  after  the  Civil  War 
nearly  half  the  carpets  were  still  woven  on  hand  looms.  Since 
that  time  has  come  the  great  advance  in  the  industry,  by  the 
introduction  of  improved  power  machinery,  which  has  reduced 
the  price  of  fine  tapestries  and  Brussels  to  that  formerly  paid 
for  the  rudest  ingrain,  and  which  has  stimulated  an  immense 
increase  in  consumption. 

The  rapid  development  of  the  national  manufactures  in 
this  period  may  be  shown  by  brief  statistics,  in  thousand 
millions  of  dollars;  the  capital  invested  grew  from  1.0  to  22.8 
while  the  value  of  the  product  grew  from  1.9  to  24.2. 

678.  Extension  of  manufactures  in  the  West  and  South. 
—  There  had  been,  moreover,  a  noteworthy  change  in  the 
distribution  of  manufactures  throughout  the  country.  The 
northeastern  States  had  greatly  extended  their  manufacturing 
plants,  and  relatively  to  population  no  European  state  rivalled 
New  England  in  output:  but  American  manufactures  had 
extended  also  into  the  West  and  the  South.  The  southern 
States,  instead  of  sending  their  raw  cotton  to  the  North  or  to 
Europe,  began  to  manufacture  it  in  increasing  quantities, 
and  now  competed  with  northern  mills  for  the  markets  of  the 
Mississippi  Valley.  The  development  of  iron  production  in 
the  South  was  phenomenally  rapid.  The  rich  coal  and  iron 
fields  of  the  Southern  Appalachian  range  were  opened,  and 
contributed  now  an  important  share  of  the  total  output,  while 
large  industrial  centers  were  growing  up  in  Chattanooga, 
Birmingham,  and  other  Southern  cities. 


NATIONAL  DEVELOPMENT,   1860-1914  563 

QUESTIONS  AND  TOPICS 

1.  Chart  the  figures  as  before;    if  the  same  scale  is  used  the  chart 
may  be  pasted  to  that  previously  made. 

2.  Industrial  aspects  of  the  Civil  War.     [Wright,  143-158.] 

3.  The  population  of  the  country  was  as  follows,  in  round  millions: 
1860,  31;   1870,  39;    1880,  50;    1890,  63;   1900,  76;   1910,  92.    Calculate 
the  commerce  per  capita,  and  insert  the  line  on  the  chart. 

4.  What  has  been  the  gain  in  population  of  your  own  State  in  this 
period,  compared  with  earlier  periods?    [Abstract  of  the  Census.] 

5.  Write  a  report  on  the  history  of  one  of  the  western  railroads.     [Cy 
Warman,  Story  of  the  railroad,  N.  Y.,  Appleton,  1898,  $1.50.] 

6.  Technical  improvements  in  railroads.    [See  references  in  chap,  xxx, 
and  Johnson,  chap.  4.] 

7.  Development  of  railroad  organization.     [Hadley,  chap.  5.] 

8.  Contributions  of  railroads  to  industrial  development.     [Hatfield, 
Lectures,  81  ff.] 

9.  Freight   service   of  the   modern   American   railroad.     [Johnson, 
chap.  9.] 

10.  Present  and  future  of  the  Erie  Canal.     [Encyclopedia;    Poole'a 
Index.] 

11.  Possible  future  of  ship  canals  in  the  United  States.    [Report  of 
the  Deep  Waterways  Commission,  House  Doc.  192,  54th  Cong.,  2d.  sess.] 

12.  River  transportation  in  the  Mississippi  Valley.    [Abbot,  chap.  8; 
Census,  1890,  Transportation  by  water,  pp.  393-465;    Report  of  Indust. 
Comm.,  1900,  9:    clxxxiv-clxxxviii.] 

13.  Place  of  the  Great  Lakes  in  our  modern  transportation  system. 
[Tunnell;   Marvin,  chap.  17;   Abbot,  chap.  7.] 

The  St  Mary  Canal.     [Tunnell;    Fairlie,  Ship  canals,  p.  67  ff.] 

14.  What  would  be  the  effect  on  lake  traffic  of  commercial  union 
with  Canada? 

15.  The  coasting  trade  of  the  United  States.     [Marvin,  chap.  15; 
Van  Metre  in  Carnegie  History,  vol.  1,  chap.  20,  21.] 

16.  Effect  of  the  Civil  War  on  shipping.    [Marvin,  chap.  14;   Cam- 
bridge Mod.  Hist.,  vol.  7,  chap.  17,  by  Wilson;   Rhodes,  Hist.] 

17.  Decline  of  American  shipping  since  the  War.    [Marvin,  chaps.  16, 
18;   Wells.] 

18.  The  question  of  subsidies.     [Ringwalt,  Briefs.] 

19.  Ship  building  in  the  United  States.    [Depew,  chap.  18  by  Cramp; 
B.  Taylor  in  Fortnightly  Rev.,  1899,  71:   284-299;   John  H.  Morrison, 
History  of  New  York  ship  yards,  N.  Y.,  1909.] 

20.  Taking  the  heads  suggested  (natural  resources,  labor,  capital, 
means  of  transportation,  market),  how  would  the  following  countries, 


564  A   HISTORY  OF  COMMERCE 

in  your  opinion,  compare  with  the  United  States  as  a  field  for  the  develop- 
ment of  manufactures:    Belgium,  China,  Germany,  Russia,  France? 

21.  Industrial  development,  1860-1890.     [Wright,  159-188.] 

22.  Transportation  of  coal  by  railroads.    [Nicolls,  chaps.  19,  20,  21.] 

23.  Geography  and  organization  of  the  coasting  trade  in  coal.  [Nicolls, 
chap.  22. 

24.  Methods  employed  in  American  coal  mines.     [Nicolls,  part  2.] 

25.  Power  employed  in  manufactures.    [U.  S.  Census,  Manufactures, 
General  report,  Abstract  of  the  census  of  manufactures.] 

26.  The  New  South.    [Coman,  292-298.] 


BIBLIOGRAPHY 

BIBLIOGRAPHY.  —  See  chap,  xlv  and  add:  Poole's  Index  and  its 
continuations,  Annual  library  index  and  Readers'  guide  to  periodical 
literature;  debaters'  handbooks,  ed.  R.  C.  Ringwalt,  E.  R.  Nichols,  and 
Debaters'  handbook  series. 

GENERAL.  —  Wells,  **  Rec.  econ.  changes;  Edward  Atkinson,  *  In- 
dustrial progress,  N.  Y.,  1890,  *  Distribution  of  products.  N.  Y.,  1892; 
H.  R.  Hatfield,  ed.,  *  Lectures  on  commerce,  Chicago,  1904:  J.  F.  Rhodes. 
*  History  of  U.  S.,  N.  Y.,  1893  ff.;  R.  Mayo-Smith  and  E.  R.  A.  Seligman, 
**  Commercial  policy,  1860-1890,  Leipzig,  1892. 

SPECIAL.  —  Railroads:  J.  Moody,  **The  railroad  builders,  New  Haven, 
1920;  Cy  Warman,  *  The  story  of  the  railroad,  N.  Y.,  1898;  C.  F.  Adams, 
Jr.,  and  Henry  Adams,  Chapters  of  Erie,  Boston,  1871.  Lake  trade: 
J.  C.  Mills,  **  Our  inland  seas,  Chicago,  1910;  G.  Tunnell,  *  Transpor- 
tation on  the  Great  Lakes,  Jour,  of  Pol.  Econ.,  June,  1896,  4:  332-351; 
Charles  Moore,  editor,  The  Saint  Marys  Falls  canal,  Detroit,  1907,  S.  V.  E. 
Harvey,  Jubilee  annals  of  the  Lake  Superior  ship  canal,  Cleveland,  1906. 
Industrial:  H.  Thompson,  **  The  age  of  invention,  New  Haven,  1921; 
J.  W.  Roe,  *  English  and  American  tool  builders,  New  Haven,  1916; 
B.  E.  Hazard,  Organization  of  the  boot  and  shoe  industry  before  1875, 
Cambridge,  Harvard  Press,  1921;  M.  T.  Copeland,  The  cotton  manu- 
facturing industry,  Cambridge,  1912. 

SOURCES.  —  Material  in  government  documents  becomes  in  this 
period  much  richer  and  more  varied.  Beside  the  reports  on  Commerce  ^ 
and  Navigation  (including  many  special  reports  on  Internal  Commerce) 
and  Commercial  Relations,  see  the  Statistical  Abstract,  Monthly  Summary 
of  Commerce  and  Finance  (including  current  statistics  and  useful  mono- 
graphs), the  Census,  Reports  and  Statistics  of  the  Interstate  Commerce 
Commission,  Report  of  the  Industrial  Commission,  1900-02,  Reports  of 
the  Tariff  Board  and  Tariff  Commission  (including  noteworthy  reports 
on  cotton  and  wool  manufactures,  1912.)  The  Bureau  of  Manufactures, 


NATIONAL  DEVELOPMENT,   1860-1914  565 

later  termed  Bureau  of  Foreign  and  Domestic  Commerce,  issued  in  its 
Miscellaneous  series,  a  number  of  reports  useful  for  a  survey  of  commercial 
conditions  just  before  the  outbreak  of  the  World  War;  no.  11.  American 
manufactures  in  foreign  markets;  no.  14,  Annual  review  of  the  foreign 
commerce  of  the  U.  S.,  1913;  no.  15,  Trade  of  U.  S.  with  the  world,  1912- 
13;  no.  38,  do.  for  1914-15;  no.  23,  Trade  of  the  U.  S.  with  other  Ameri- 
can countries,  1913-14;  no.  33,  Ports  of  the  U.  S.  (terminal  facilities, 
commerce,  port  charges,  etc.,  at  68  selected  ports). 


EXPORTS,   1860-1914 

679.  Chief  exports  in  1913.  —  The  principal  items  of  the 
export  trade  of  the  United  States  in  1913  are  given  in  the 
following  table,  with  which  should  be  compared  the  table  in 
section  633. 

EXPORTS  OF  U.S.,  1913,  MILLIONS  OP  DOLLARS 

Cotton -   547 

Iron  and  steel  and  manufactures 305 

Breadstuffs 211 

Provisions,  including  dairy 154 

Copper  and  manufactures 140 

Mineral  oils 137 

Wood  and  manufactures 116 

Total  of  these  items,  omitting  decimals 1,610 

Total  exports  of  domestic  merchandise,  including  items 

omitted 2,429 

Total  foreign  exports 37 

Exports  of  precious  metals 149 

680.  Noteworthy  changes  since  1860.  —  The  table  shows 
that  in  one  general  respect  the  export  trade  of  the  country 
remained  unchanged;   seven  items  made  up  nearly  two  thirds 
of  the  immense  total  of  the  exports.    While  the  country  con- 
tinued to  rely  upon  a  few  great  staples  for  the  means  of  pur- 
chasing foreign  wares,  there  had  been  since  1860  some  note- 
worthy changes  in  the  relative  rank  of  the  chief  items  and  in 
the  general  character  of  the  export  trade.    Cotton  continued 
to  be  a  leadkig  item,  and  was  still  at  the  head  of  the  list  in  1913. 
In  intervening  years  it  had  for  a  time  yielded  first  place  to  bread- 
stuffs;  and  another  item  associated  with  the  agriculture  of  the 
northern  and  western  states,  provisions,  had  risen  to  prominence. 

666 


EXPORTS,   1860-1914 


567 


This  item  includes  dairy  products  as  well  as  various  kinds  of 
meat,  but  does  not  include  live  animals.  In  general,  however, 
the  agriculture  of  the  country  no  longer  occupied  the  command- 
ing position  which  it  had  once  held  in  our  export  trade.  In 
1860  American  agriculture  supplied  more  than  four  fifths  of 
the  value  of  domestic  exports  of  the  country;  in  1913  it  sup- 
plied less  than  half.  American  industry  had  become  diversified. 
While  the  country  still  depended  largely  on  the  raw  products  of 
its  natural  resources  for  the  means  of  exchange  in  its  foreign 
trade,  it  had  broadened  the  field  of  its  activities  to  include  its 
mineral  as  well  as  its  agricultural  wealth,  and  had  begun  to 
sell  an  increasing  share  of  its  products  in  the  form  of  manu- 
factured or  partly  manufactured  wares. 

681.  Change  in  character  of  the  export  trade.  —  The  change 
in  the  general  character  of  American  export  trade  through  this 
period  can  be  best  illustrated  by  comparing  the  whole  group 
of  foodstuffs,  both  raw  and  manufactured,  with  the  group  of 
industrial  products  (manufactures  for  further  use  in  manu- 
facturing, and  manufactures  ready  for  consumption).  The 
table  of  figures  shows  that  in  the  generation  from  1880  to  1910 


Exports  of  U.S. 

Foodstuffs 

Manufactures 

Fiscal  year 

Value  millions 
of  dollars 

Per  cent 
of  total 

Value  millions 
of  dollars 

Per  cent 
of  total 

1880 

459 

55 

121 

14 

1885 

325 

44 

150 

20 

1890 

356 

42 

178 

21 

1895 

318 

40 

205 

25 

1900 

545 

39 

484 

35 

1905 

401 

26 

611 

40 

1910 

369 

21 

766 

44 

1912 

418 

19 

1,020 

47 

these  two  groups  practically  changed  places  in  the  part  that 
they  played  in  American  export  trade.    The  value  of  the  total 


EXPORTS,   1860-1914  569 

product  of  agriculture  at  home  did  not  cease  to  grow,  and 
indeed  rose  rapidly  and  steadily.  The  home  market,  however, 
grew  so  fast  that  the  surplus  available  for  export  remained 
nearly  stationary,  and  formed  a  constantly  smaller  part  of 
the  expanding  total.  The  country  began  to  look  to  its  indus- 
trial resources  to  buy  what  it  wanted  from  foreign  lands. 

682.  Reasons  for  the  increase  of  agricultural  exports. — 
The   great   growth   in   the   exports   of   northern   agricultural 
products  was   due   to  the  improvements  in  transportation, 
which  opened  the  markets  of  the  Old  World  to  the  food  sup- 
plies produced  so  abundantly  in  the  New.    There  is  general 
agreement  that  no  other  part  of  the  earth's  surface  presents 
an  area  that  can  compare  in  quantity  and  quality  of  agricul- 
tural land  with  the  Mississippi  Valley.     The  larger  part  of 
this  area  still  awaited  cultivation  at  the  close  of  the  Civil 
War,  and  was  brought  under  the  plow  in  the  period  following  it. 
Good  land  could  be  had  free  of  charge  by  settlement  under  the 
homestead  laws,  or  could  be  bought  for  prices  little  above  what 
European  farmers  had  to  pay  as  rent  or  interest. 

683.  Improvement  of  agricultural  implements.  —  The  pro- 
ductiveness  of  American   agriculture  was  furthered  in  this 
period  by  still  another  factor,  the  improvement  of  farm  im- 
plements and  machinery.     American  ingenuity,  always  pro- 
verbial, applied  itself  to  the  problem  of  getting  the  largest 
crops  with  the  least  labor,  and  devised  means  which  were 
peculiarly  suited  to  the  conditions  of  the  country  and  the 
times.     The  automatic  reaper,  on  which  inventors  had  long 
been  working,  had  become  a  practical  success  by  the  middle 
of  the  century,  and  spread  rapidly  after  its  merits  had  been 
advertised  at  the  Crystal  Palace  in  1851.     An  agricultural 
writer  expressed  himself  as  follows  in  1866:    "The  reaper  and 
mower    have    become  '  institutions  '  —  a  necessity,    and    no 
farmer  of  any  standing  ignores  their  use.    The  machinery  for 
raking  and  loading  hay  in  the  field,  and  the  unloading  in  the 
barn  and  on  the  stack,  the  potato  digger,  the  corn  cutter,  the 
bean  puller,  the  cultivator,  the  corn  and  bean  planter  and 


570  A  HISTORY  OF  COMMERCE 

seed  sower,  threshing  machines,  corn  shellers,  fanning  mills, 
straw  and  root  cutters,  hay  rakes,  tile  ditchers,  &c.,  &c.,  though 
not  all  of  recent  introduction,  have  all  been  greatly  simplified 
and  improved;  in  short  every  implement  of  farm  husbandry, 
from  the  hoe  to  the  reaper,  has  undergone  various  transforma- 
tions for  the  better  since  the  late  change  of  the  times.  .  .  ." 
Every  step  in  advance  led  to  another.  The  reaper  was 
displaced  by  the  harvester,  which  accomplished  the  same 
results  with  less  labor;  and  this  in  turn  gave  place  to  the 
twine  binder,  which  showed  still  greater  efficiency. 

684.  Wheat  and  flour.  —  The   leading  place  among  the 
breadstuffs  exported  fell  to  wheat.    A  large  part  of  the  Ameri- 
can wheat  crop  had  found  its  market  in  the  southern  States, 
before  the  Civil  War.    The  closing  of  this  market  by  war  threw 
the  whole  surplus  on  Europe,  and  the  wheat  exports  increased 
actually  ninefold  from  1860  to   1863.     They  declined  for  a 
time,  when  the  South  was  opened  to  trade,  but  rose  again  as 
the  soldiers  from  the  disbanded  armies  and  other  colonists 
settled  on  the  western  prairies;   and  about  1880  grew  to  very 
large  figures.    The  method  of  transportation  was  improved  by 
building  great  elevators  and  introducing  machinery  to  handle 
the  grain  at  all  points  of  transshipment;   a  system  of  grading 
and  classification  enabled  the  wheat  to  be  carried  in  bulk, 
without  regard  to  small  specific  lots;    and  the  charges  for 
storage  and  movement  fell  greatly.    The  instruments  of  modern 
transportation  carried  a  ton  of  wheat  from  Minneapolis  to 
Liverpool  for  less  than  it  cost  a  farmer,  thirty  years  before, 
to  haul  it  by  wagon  a  hundred  miles. 

For  many  years  after  1860  most  of  the  wheat  was  exported 
as  grain,  and  was  milled  abroad.  The  introduction  of  European 
improvements,  producing  flour  not  by  the  old  millstones  but 
by  gradual  reduction  between  rollers,  established  again  the 
reputation  of  American  flour;  and  about  half  in  value  of  the 
wheat  export  left  the  country  in  the  manufactured  form. 

685.  Indian  corn.  —  No  other  cereal  compared  in  value 
with  wheat  among  the  exports  of  the  United  States.    In  his 


EXPORTS,   1860-1914  571 

"  Indian  corn  speech,"  delivered  in  1877,  Tilden  predicted  a 
great  increase  in  the  export  of  corn,  which  yields  a  much  larger 
supply  of  food  from  a  given  area,  and  hence  can  be  sold  more 
cheaply.  The  corn  crop  was  one  of  the  most  valuable  assets 
of  the  country;  it  served  not  alone  for  food,  but  supplied  also 
raw  materials  for  the  manufacture  of  starch,  alcohol,  glucose, 
etc.  Its  most  important  use,  however,  was  for  feeding  and 
fattening  stock,  and  its  contribution  to  the  exports  of  the 
country  was  mainly  indirect,  in  the  form  of  animals  and  animal 
products. 

686.  Stock,  meat,  and  dairy  products.  —  Live  stock,  chiefly 
beef  cattle,  were  exported  in  large  quantities  in  this  period; 
the  railroads  offered  every  facility  for  bringing  them  to  the 
seaboard,  and  special  steamers  transported  them  across  the 
Atlantic  in  about  ten  days.     Still  more  important,  however, 
was   the  export  of   animal   products.     The   refrigerator  car, 
patented  in  1868,  enabled  the  meat  of  animals  slaughtered  in 
the  West  to  be  carried  to  market  in  all  parts  of  the  country,  and 
stimulated  the  development  of  an  immense  packing  industry 
in  the  regions  where  stock  were  raised  and  fattened.     The 
export  of  fresh  meat,  which  began  about  1875,  increased  con- 
stantly in  the  last  quarter  of  the  century,  and  formed  a  con- 
siderable item.    Of  even  greater  value  was  the  export  of  bacon 
and  hams,  while  lard,  tallow,  pickled  and  canned  meats  con- 
tributed in  varying  proportions  to  the  total  of  animal  products 
exported.    The  dairy  products  occupied  a  less  important  place 
in  foreign  than  in  internal  trade;    and  before  the  end  of  the 
period  the  export  of  these  products  had  declined  to  insignificance. 

687.  Relative  decline  in  importance  of  exports  from  the 
South.  —  The  exports  which  have  been  considered  hitherto 
come   mainly,   though   by   no   means   exclusively,   from   the 
northern  and  western  States.     The  South  contributed  still 
one  great  item,  cotton,  but  lost  the  commanding  position  in 
the  export  trade  which  it  held  before  the  Civil  War.    It  would 
be  a  mistake,  however,  to  suppose  that  the  war  was  the  cause 
of  this  change.    It  did,  for  a  time,  nearly  annihilate  the  com- 


572  A  HISTORY  OF  COMMERCE 

merce  of  the  South,  and  it  absorbed  so  much  of  the  capital  as 
to  cripple  productive  power  for  a  considerable  period.  It 
swept  away  the  system  of  slavery,  and  forced  the  people  to 
adjust  themselves  to  this  most  serious  of  changes.  It  left- 
untouched,  however,  the  natural  resources  of  the  country, 
and  the  New  South,  which  has  risen  since  1880,  devoted 
itself  to  the  task  of  developing  these  resources  with  energy 
and  success.  Meanwhile,  however,  parts  of  the  country  which 
hardly  counted  in  foreign  trade  before  1860,  had  been  brought 
within  reach  of  the  seaboard,  and  had  been  settled  by  millions 
of  active  producers.  The  balance  of  commercial  power  was 
thus  changed,  not  by  the  decline  of  the  South  but  by  the  rise 
of  other  parts  of  the  country. 

688.  Cotton.  —  English  manufacturers,  who  had  been  in 
great  straits  for  cotton  during  the  Civil  War,  and  had  in  vain 
endeavored  to  find  the  raw  material  in  sufficient  quantity  and 
of  satisfactory  quality  in  other  parts  of  the  world,  returned 
gladly  to  their  former  source  of  supply,  the  southern  States. 
The  cotton  crop  brought  high  prices,  the  records  of  cotton 
production  and  export  in  the  years  before  the  war  were  soon 
reached  and  surpassed,  and  the  cotton  culture  continued 
to  grow  down  to  the  end  of  the  century.  There  have  been 
years  since  1890  when  the  price  has  fallen  so  low  as  to  leave 
little  profit  for  the  producers;  and  it  has  often  been  suggested 
that  the  South  was  suffering  from  an  over-production  of  its 
staple  crop,  and  would  fare  better  if  it  grew  less  cotton  and 
more  of  other  crops.  Southern  farmers  were  constantly  ad- 
vised to  diversify  their  products.  They  seem  to  have  followed 
this  advice  to  a  certain  extent,  and  have  begun  to  furnish  the 
northern  States  with  a  considerable  supply  of  food  products, 
especially  fruit  and  vegetables,  in  direct  contrast  with  the  course 
of  trade  before  the  Civil  War  when  most  of  the  food  shipments 
were  in  the  other  direction.  They  seem,  however,  to  have 
found  no  substitute  for  cotton  as  an  export  product,  and 
have  made  that  still  their  single  great  staple  in  foreign 
trade. 


EXPORTS,   1860-1914 


573 


689.  Export  of  mineral  products :   iron.  —  It  has  been  as- 
serted by  an  eminent  geologist  that  North  America  is  richer 
than  any  other  continent  in  the  mineral  substances  which 
have  most  contributed  to  the  development  of  man.     Every 
metal  except  tin  has  been  found  in  quantities  of  economic 
importance.    We  must  concern  ourselves  here  chiefly  with  the 
one  metal,  iron,  that  which  has  held  the  chief  place  in  economic 
progress  in  recent  times,  and  in  the  production  of  which  the 
United  States  has  made  surprising  advance.    Before  1860,  as 
noted  above,  the  United  States  had  merely  followed  England 
at  a  respectful  distance,  in  the  methods  of  iron  making.    Since 
1860  the  iron  makers  of  America  have  outstripped  all  com- 
petitors, in  the  efficiency  of  their  methods  and  in  the  quantity 
of  their  output,  and  have  made  the  United  States  the  leading 
country  of  the  world  in  iron  production.     The  American  iron 
industry  has  shown  itself  competent  not  only  -to  meet  the 
immense  demands  of  the  home  market,  but  also  to  produce 
for  export  in  competition  with  other  countries  the  large  amounts 
shown  by  the  figures  at  the  opening  of  this  chapter. 

690.  Recent  development  of  the  American  iron  industry. 
—  The  following  table  shows  that  the  advance  of  the  iron 
industry  was  slow  for  a  long  time,  and  that  its  present  power 
is  of  very  recent  growth. 


PRODUCTION  IN  MILLIONS 
OF  TONS 

COMMERCE  IN  MILLIONS 
OF  DOLLARS,  IRON,  STEEL, 
AND  MANUFACTURES 

Pig  Iron 

Steel 

Imports 

Exports 

1860 

0.8 

1.7 
3.8 
9.2 
13.7 
27.3 
31.0 

26 
32 

53 
41 
20 
40 
34 

5 
11 
12 
25 
121 
179 
305 

1870  

0.07 
1.2 
4.3 
10.2 
26.1 
31.3 

1880  

1890  

1900  

1910        

1913  

574  A   HISTORY  OF  COMMERCE 

Among  the  causes  contributing  to  this  result  one  of  the 
most  important  has  been  the  development  of  the  rich  ore 
deposits  of  the  Lake  Superior  region  and  Alabama.  Economies 
in  handling  the  ore,  by  means  of  steam  shovels  and  carriers, 
and  in  transporting  it  by  water  and  railroad,  have  enabled  it 
to  be  brought  to  the  heart  of  the  coal  and  coke  regions  at 
comparatively  slight  expense.  In  the  reduction  of  the  ore  and 
in  the  various  processes  of  manufacture  the  American  iron 
makers  in  recent  times  have  been  quick  to  introduce  improve- 
ments discovered  in  other  countries;  and  have  themselves 
contributed  important  devices  by  which  the  efficiency  of  the 
labor  employed  in  iron  manufacture  has  been  greatly  increased. 

691.  Machinery.  —  The  least  valuable  part  of  the  iron 
export  is  that  which  leaves  the  country  in  the  raw  or  partly 
manufactured  state.  The  single  item  of  machinery  (electrical, 
sewing  machines,  locomotives,  typewriters,  etc.),  makes  up 
nearly  half  the  value  of  the  iron  and  steel  exports;  while  other 
items  (agricultural  implements,  cars,  bicycles,  etc.),  made  up 
largely  of  iron  and  steel,  would  swell  the  importance  of  the 
exports  of  iron  manufactures  still  further,  if  they  were  included 
in  the  list. 

The  Americans  have  recently  taken  the  place  of  leaders 
among  the  machine  builders  of  the  world,  and  no  country, 
however  high  it  may  have  ranked  in  the  past,  can  afford  now 
to  neglect  the  contributions  offered  by  American  machinists. 
The  cheapness  of  raw  materials,  iron  and  steel,  has  aided  the 
recent  development  of  the  American  machine  industry,  but 
has  not  caused  it.  We  must  look  further,  to  the  ingenuity  of 
inventors  encouraged  by  a  liberal  patent  system,  and  to  the 
genius  of  business  leaders  who  have  known  how  to  make  use 
of  the  contributions  of  technical  science  to  industrial  efficiency. 
We  must  recognize  that  the  Americans  got  some  positive 
benefit  from  the  fact  that  they  entered  late  into  this  part  of 
the  field  of  production.  They  were  not  tied  to  the  past  by 
heavy  investments,  or  by  methods  sanctified  by  tradition. 
Finally,  we  must  note  again  the  stimulus  of  the  American 


EXPORTS,   1860-1914  575 

market,  the  broadest  and  richest  in  the  world,  constantly 
expanding  and  offering  unparalleled  rewards  to  those  who  met 
its  demands  for  improved  instruments. 

692.  Copper.  —  Copper  is  a  metal  which  has  long  been 
prized  as  one  of  the  components  of  brass,  and  which  has  been 
still  more  highly  valued  since  the  development  of  electrical 
industry  has  increased  the  field  of  its  use.     Until  after  the 
middle  of  the  century,  however,  the  United  States  had  to  rely 
upon  foreign  countries,  chiefly  Chile,  for  most  of  its  supply, 
and  the  importance  of  copper  as  an  article  of  export  dates 
from  recent  times.     The  opening  of  the  mines  of  the  Lake 
Superior  region,  the  richest  copper  mines  of  the  world,  enabled 
the  country  by  1860  to  supply  the  demand  for  this  metal  from 
native   sources,    and   the   later   development,   including   new 
sources  of  supply  in  Arizona  and  Montana,  has  furnished  since 
1880  a  large  surplus  for  sale  abroad.     The  copper  mines  of 
Michigan,  which  reach  a  depth  of  nearly  a  mile,  are  said  to  be 
the  best  examples  in  the  world  of  skilful  and  economical 
mining,  and  improved  processes  of  reduction  have  made  avail- 
able copper  ores  which  formerly  would  not  pay  the  working. 

693.  Petroleum.  —  Even  in  colonial  times  the  presence  of 
mineral  oil  in  the  country  was  known  by  the  film  which  col- 
lected on  the  surface  of  certain  springs,  and  which  took  fire 
when  a  light  was  applied  to  it.    A  well  of  oil  which  spouted 
fifty  feet  was  discovered  on  the  bank  of  the  Cumberland  River 
in  1830,  but,  as  stated  in  a  book  published  in  1853,  "it  was  found 
to  be  useful  only  medicinally,  and  is  bottled  and  exported  for 
that  purpose."    The  interest  in  this  new  product,  which  seemed 
to  offer  possibilities  beyond  its  use  as  a  proprietary  medicine, 
led  to  the  organization  in  1854  of  a  "Rock  Oil  Company"; 
and  the  first  oil  well  was  driven  near  Titusville,  Pa.,  four 
years  later.    Soon  after  1860  the  export  of  oil  to  foreign  countries 
began,  with  little  idea  that  the  trade  thus  started  was  to  be- 
come one  of  the  great  features  of  American  foreign  commerce. 
Mineral  oil  was  in   1913  one  of  the  leading   exports  of  the 
country,  and  would  take  a  still  larger  place  in  the  exports 


576  A   HISTORY  OF  COMMERCE 

as  given  at  the  beginning  of  this  chapter  if  various  by-products, 
such  as  paraffin,  were  included  in  the  figures. 

694.  Development  of  the  oil  industry.  —  The  chief  ob- 
stacle to  the  development  of  the  oil  trade  in  its  early  years 
was  the  difficulty  of  transportation.  The  extension  of  the 
railroad  system  after  1860  furnished  the  means  of  bringing 
the  oil  to  market  with  profit,  and  in  recent  times  the  trans- 
portation and  manufacture  of  oil  products  have  been  developed 
to  wonderfully  high  efficiency.  Tank  cars  have  given  place  to 
pipe  lines;  refineries  have  been  extended  and  perfected,  that 
the  reduction  of  the  crude  oil  might  be  carried  on  with  the 
greatest  economy  and  with  full  utilization  of  all  by-products; 
and  the  market  for  oil  products  at  home  and  abroad  has  been 
enlarged  by  a  great  reduction  of  prices. 

QUESTIONS  AND  TOPICS 

1.  Chart  the  figures,  as  previously  suggested,  for  comparison  with 
earlier  conditions. 

2.  What  other  parts  of  the  world  come  nearest  to  the    Mississippi 
Valley  in  quality  and  quantity  of  agricultural  land?     How  do  they  com- 
pare in  the  character  of  the  people,  and  the  facilities  for  transportation? 

3.  History  of  farm  machinery.     [Quaintance  in  Pub.  Amer.  Econ. 
Assoc.,  1904,  vol.  5,  pp.  799-809;    Census,  1900,  10:   341-377;    Depew, 
chap.  50  by  Fowler.] 

4.  Effect  of  improved  farm  machinery  on  production.    [Quaintance, 
pp.  810-826.] 

5.  Agricultural  progress,  1850-1900.    [U.  S.  Census,  1900,  5:    xvi- 

XXXV.] 

6.  Cultivation  of  wheat  in  the  U.  S.     [Edgar,  Story,  chaps.  7,  8.] 

7.  The  grain  trade  of  the  U.  S.     [Monthly  Summary,  Jan.,  1900.] 

8.  Grain  elevators  and  warehouses.     [Rep.  Ind.  Comm.,  1900,  10: 
cccxvii-cccxxxix;    Monthly  Summary,  Oct.,  1903.] 

9.  The  flour  milling  industry.    [Edgar,  Story,  chaps.  10,  11;  Depew, 
chap.  39  by  Pillsbury;   U.  S.  Census. 

10.  What  are  the  various  products  obtained  from  maize?    [Encyc.; 
commercial  geographies.] 

11.  The  packing  industry.     [Depew,  chap.  55  by  Armour;    Census, 
1900,  9:   385-429,  1910,  10:   333-353.] 

12.  The  dairy  industry.    [Census,  1900,  5:   clxv-clxxxvi;   Rep.  Ind. 
Comm.,  1900,  6:    268-296.] 


EXPORTS,   1860-1914  57? 

13.  Economic  effect  of  the  Civil  War    on  the  South     [Cambridge 
Mod.  hist.,  vol.  7,  chap.  19  by  Schwab;  Rhodes,  Hist.  U.  S.]   . 

14.  The  cultivation  of  cotton  since  I860.    [Hammond,  pp.  120-228.] 

15.  Recent  development  of  the  cotton  trade.    [Hammond,  pp.  324- 
350;  U.  S.  Mo.  Summary,  March,  1900;  Depew,  chap.  34  by  Edmonds.] 

16.  By-products   of   the   cotton   industry.     [Depew,   chap.   67   by 
Chancy;    Census,   1900,  9:    58-5-594.] 

17.  Recent  history  of  the  Virginia  tobacco  industry.    [B.  W.  Arnold, 
History,  Baltimore,  1897,  $.50.] 

18.  Recent  development  of  the  American  iron  industry.     [Depew, 
chap.  46  by  Huston;  Cro well  in  International  Monthly,  1901,  4:  211-250; 
Census,  1900,  7:  cxlix,  10:  1-77;  Monthly  Summary,  Aug.,  1900.] 

19.  The  steel  industry.     [Hatfield,  Lectures,   131  ff.;    Thurston  in 
Century  Magazine,  1900-1901,  61:   562-568.] 

20.  The  mining  of  iron  ore.    [Fawcett  in  Century  Magazine,  1900- 
1901,  61:   712-725;    Census,  Mines,  1902,  pp.  393-431.] 

21.  The  transportation  of  iron.     [Fawcett  in  Century  Magazine, 
1900-1901,  61:   851-863.] 

22.  Write  a  report  on  one  of  the  following  topics,  using  volumes  of 
the  U.  S.  Census,  Manufactures,  Reports  for  principal  industries. 

(i)  Manufacture  of  machine  tools, 
(6)  Sewing  machines. 

(c)  Typewriters. 

(d)  Watches. 

23.  Development  of  the  American  copper  industry.    [Depew,  chap. 
47  by  Cowles;  chap.  27,  p.  182,  by  Rothwell;  Census,  Mines,  1902,  467- 
505.] 

24.  The  uses  and  production  of  petroleum.    [Census,  1880,  vol.  10, 
first  monograph;    Mines,  1902,  pp.  719-764;    Encyc.] 

25.  Development  of  the  American  oil  industry.     [Depew,  chap.  31 
by  Folger;  G.  H.  Montague,  The  Standard  Oil  Company,  N.  Y.,  Harper, 
1903.] 

BIBLIOGRAPHY 

See  chapter  li. 


CHAPTER  LIII 

IMPORTS,  POLICY,  DIRECTION   OF   COMMERCE,   1860-1914 

695.  Survey  of  the  import  trade,  1860-1914.  —  The  devel- 
opment of  the  import  trade  of  the  United  States  since  1860  is 
shown  in  the  following  table,  which  gives  the  values  in  millions 
of  dollars  of  merchandise  imported: 


18( 

>0 

19 

L3 

Value 

Per  rent 

Value 

Per  cent 

Foodstuffs,  crude  

36 

10 

212 

12 

Foodstuffs,  manufactured  

54 

15 

194 

11 

Raw  materials  for  manufacture  . 
Manufactures  for  further  use  in 
manufacture  

37 

24 

10 

7 

635 
349 

35 
19 

Manufactures    ready    for    con- 
sumption          

200 

57 

408 

23 

Total,  incl.  miscellaneous  

534 

1,813 

696.  Changes  in  the  character  of  imports.  —  The  per- 
centages of  the  table  furnish  a  ready  means  of  comparing  the 
relative  importance  of  different  classes  of  imports  at  the  be- 
ginning and  end  of  the  period.  The  most  striking  change  is 
the  decline  in  importance  of  the  class  of  manufactured  articles 
ready  for  consumption,  which  amounted  to  over  one  half  of 
the  total  value  of  imports  in  1860,  and  sank  to  less  than  one 
quarter  in  1913.  The  indication  here  given  that  the  country 
was  learning  to  supply  its  need  for  manufactured  wares, 
without  depending  so  much  as  previously  on  foreign  producers, 

578 


IMPORTS,   DIRECTION  OF  COMMERCE,    1860-1914      579 

is  confirmed  by  another  item  in  the  table,  giving  the  imports 
of  raw  materials  for  domestic  industries.  This  item  increased 
greatly  in  importance  in  the  course  of  the  period,  and  took 
now  the  place  which  was  formerly  held  by  the  item  of  finished 
manufactures.  We  now  imported  raw  materials  and  made  the 
goods  at  home,  instead  of  sending  abroad  for  the  finished 
product. 

697.  Character  of  foods  imported.  —  The  large  item  of 
food  supplies  imported  would  seem  to  show  that  the  United 
States  resembled  the  countries  of  western  Europe  in  being 
unable  to  nourish  its  population  from  its  own  resources.    Such 
an  idea  would  be  wide  of  the  facts.    The  figures  of  the  previous 
chapter  have  shown  that  the  country  could  spare  for  export 
immense  quantities  of  the  staple  foods,  such  as  wheat  and 
meat,  and  the  item  of  food  imports  covered  mainly  luxuries, 
which  the  country  could  afford  to  buy  abroad  in  increasing 
quantities  as  it  gained  in  spending  power.     We  may  take  as 
characteristic  the  case  of  the  so-called  Zante  currants,  seedless 
raisins  which  are  used  in  cakes,  puddings,  etc.,  and  which  are 
so  clearly  a  superfluous  luxury  that  in  England  they  are  made 
the  object  of  a  revenue  tax.    The  imports  of  Zante  currants 
into  the  United  States  were  small  and  scattering  before  the 
Civil  War,  rarely  exceeding  a  thousand  tons  in  a  year.    The 
imports  rose  rapidly  to  five  thousand  tons  after  the  war,  and 
at  the  close  of  the  century  were  about  fifteen  thousand,  in 
spite  of  the  fact  that  part  of  the  supply  was  now  raised  in  the 
country,   and  imports  were  restricted  by  protective  duties. 
Other  similar  cases  might  be  mentioned  to  show  the  peculiar 
character  of  our  food  imports. 

698.  Question  of  producing  these  foods  in  the  United 
States.    Sugar.  —  The  chief  items  among  the  imported  foods 
were  the  products  of  tropical  or  semi-tropical  agriculture,  their 
values  in  millions  of  dollars  being  as  follows  in  1913:  coffee  119, 
sugar  104,  fruits  and  nuts  43,  tea  17,  cacao  17.    Some  of  these 
articles  could  be  produced  in  this  country,  and  would  undoubt- 
edly be  grown  at  home  if  they  could  not  be  procured  so  cheaply 


580  A  HISTORY  OF  COMMERCE 

abroad.  In  general  it  has  paid  the  American  farmer  better  to 
cultivate  crops  like  cotton  and  wheat,  which  are  peculiarly 
adapted  to  the  -conditions  of  soil,  climate,  and  labor  in  the 
United  States,  rather  than  those  crops  which  can  be  grown  as 
well  or  better  abroad. 

There  has  been  a  determined  effort,  lasting  for  more  than 
a  century,  to  raise  the  necessary  supplies  of  sugar  at  home. 
The  growing  of  sugar  cane  was  an  established  industry  in 
Louisiana  by  1800,  and  has  been  continued  ever  since  in  that 
State.  During  most  of  the  time  the  industry  has  received  the 
help  of  protective  duties  or  of  bounties,  but  it  suffers  in  this 
country  from  the  danger  of  early  frosts,  and  it  has  never  grown 
strong  enough  to  relieve  the  United  States  from  dependence 
on  foreign  sources  of  supply. 

Better  prospects  seem  to  favor  the  beet-sugar  industry. 
Sugar-beets  were  first  grown  successfully  on  a  commercial 
scale  in  California  about  1890.  Since  that  time  the  culture 
of  sugar-beets  spread  to  the  prairie  and  mountain  States, 
and  after  1907  beets  furnished  more  sugar  than  American  cane. 
Including  all  sources  of  supply,  however,  the  sugar  product 
of  the  continental  United  States  was  still  less  than  one  quarter 
of  the  amount  required  by  the  people. 

699.  Increase  in  raw  materials  imported.  —  Turning  now 
to  other  classes  of  imports  we  are  faced  by  the  great  increase 
in  articles,  both  crude  and  manufactured,  used  to  supply  the 
needs  not  of  consumers  but  of  producers.  Articles  of  this 
character  had  always  formed  a  part  of  our  imports,  but  the 
growing  use  of  them  in  this  period  is  clear  testimony  to  the 
internal  development  of  the  country.  American  industries, 
which  previously  had  attained  strength  only  when  they  were 
supported  by  a  generous  supply  of  raw  materials  close  at  .hand, 
were  prepared  now  to  reach  out  to  all  parts  of  the  world  for  the 
supplies  which  they  required. 

It  is  significant,  also,  that  the  great  increase  in  these  sup- 
plies took  the  form  of  raw  materials.  Articles  wholly  or 
partially  manufactured  were  imported  still  for  use  in  Ameri- 


IMPORTS,   DIRECTION  OF  COMMERCE,   1860-1914       581 

can  industries.  These  articles  were  of  many  different  kinds; 
to  name  one  very  important  class,  that  of  chemicals  and  dyes, 
will  suggest  their  general  character.  These  articles  increased 
greatly  both  in  absolute  value  and  in  relative  importance, 
but  in  neither  respect  did  they  keep  pace  with  the  increase  of 
crude  materials  imported. 

700.  The  chief  raw  materials  among  imports.  —  Of  the 
raw  materials  imported  for  domestic  industries  in  1913  nearly 
five  sixths  in  value  were  comprised  in  the  wares  enumerated 
in  this  section.    Values  are  stated  in  round  millions  of  dollars. 

The  revolution  in  the  metal  trade  of  the  country  since  1860 
is  shown  by  the  fact  that  tin  was  the  only  metal  which  was 
imported  in  the  crude  state  in  considerable  quantities  (53 
millions);  the  country  could  now  supply  itself  with  most  of 
the  necessary  mineral  substances.  An  exception  must,  however, 
be  made  in  the  case  of  precious  stones,  50.  Of  the  products 
of  the  animal  and  vegetable  kingdoms  the  raw  materials  for 
the  textile  industry  were  most  prominent.  The  first  place 
was  taken  by  raw  silk,  85;  then  follow  the  vegetable  fibers, 
49  (sisal  grass,  Manila  hemp,  jute,  flax);  wool,  36,  cotton,  23. 
The  single  item  of  greatest  value  in  the  whole  list  was  that 
of  hides,  117;  while  India  rubber,  101,  represented  the  im- 
portance of  an  industry  that  was  still  comparatively  new,  but 
that  was  rapidly  growing  to  a  place  of  prominence. 

701.  Decline  in  importance  of  finished  manufactures  im- 
ported. —  While  the  imports  of  raw  materials  increased  greatly 
in  value,  the  imports  of  finished  manufactures,  ready  for  the 
consumer,  showed  a  great  relative  decline.     Taking  first  the 
textiles,  the  most  important  group  among  the  finished  manu- 
factures imported,  we  find  that  the  total  value  in  1913  was 
indeed  greater  than  the  value  in  1860,  but  the  increase  was 
only  about  two-thirds  while  the  increase  in  the  import  trade 
as  a  whole  was  over  four-fold.     In  round  millions  the  value 
of  the  manufactures  imported  was  as  follows  in  1913:   cotton 
60,  vegetable  fibers  and  grasses  77,  silk  31,  wool  16.    Between 
the  two  dates  there  had  been  a  great  growth  of  population 


582  A  HISTORY  OF  COMMERCE 

and  of  wealth  in  the  country,  but  the  increase  in  consumption 
was  met  mainly  by  the  development  of  home  manufactures. 
The  list  of  textile  raw  materials  imported  for  manufacture  in 
America,  given  in  the  preceding  section,  shows  a  great  gain 
in  every  staple.  The  growth  of  domestic  manufactures  had 
caused  in  the  case  of  two  important  textiles,  wool  and  silk, 
an  absolute  decline  in  the  value  of  the  manufactured  imports; 
while  the  only  case  of  a  great  increase  is  to  be  noted  in  the 
manufactures  of  the  vegetable  fibers,  jute,  etc.,  which  had  not 
come  into  extensive  use  until  after  the  middle  of  the  century. 

702.  Variety  of  imported  manufactures.  —  If  we  seek  to 
explore  the  imports  of  manufactures,  outside  the  single  group 
of  the  textiles,  we  are  confronted  by  the  same  bewildering 
variety  of  articles  as  in  previous  periods.     We  find  earthen- 
ware, china,  and  glass;  jewelry,  clocks,  works  of  art,  and  books; 
paper  and  leather  wares;    matting,  manufactured  furs,  and 
various  manufactures  of  metal.     Roughly,  a  round  dozen  of 
articles  like  those  named  above  can  be  found,  of  which  each 
showed  imports  ranging  in  value  from  two  or  three  to  ten  or 
more  millions  of  dollars. 

It  is  probable  that  the  United  States  will  always  continue 
to  import  manufactured  wares  like  those  named  above,  in 
great  variety  and  amounting  in  the  total  to  considerable  value. 
We  cannot  afford  to  refuse  the  contributions  of  peoples  who 
have  specialized  in  various  lines,  and  by  reason  of  inherited 
taste  and  skill,  or  with  the  aid  of  exceptional  natural  resources, 
can  offer  us  what  we  cannot  readily  produce  ourselves.  Since 
1860,  however,  we  have  come  to  depend  less  and  less  on  our 
foreign  trade  for  the  manufactures  which  serve  the  simpler 
household  needs,  and  the  home  product  of  many  of  the  wares 
named  greatly  exceeds  the  amount  imported  from  abroad. 

703.  Change  in  tariff  policy  since  the  Civil  War.  —  The 
growth  of  American  manufactures,  to  which  I  have  alluded 
frequently  in  preceding  sections,  has  often  been  explained  by 
the  change  in  tariff  policy  which  came  at  the  time  of  the  Civil 
War.    The  reader  must  look  in  other  books  for  a  discussion 


583 

of  that  question,  on  which  opinions  differ  so  widely.  I  shall 
attempt  here  merely  a  brief  summary  of  our  recent  tariff 
history. 

At  the  outbreak  of  the  war  a  tariff  with  moderate  pro- 
tective duties  was  in  force.  The  strain  of  the  conflict  forced 
the  government  at  Washington  to  adopt  every  available  means 
of  raising  revenue.  Heavy  taxes  were  laid  on  manufacturers 
and  other  producers  in  the  country,  and  the  tariff  was  raised, 
to  secure  increased  revenue  from  the  importers  and  consumers 
of  foreign  wares.  Such  an  increase  was  necessary,  not  only  to 
raise  revenue  but  also  to  enable  the  American  manufacturers 
to  hold  their  own  in  the  home  market,  in  spite  of  the  taxes 
which  they  paid.  Actually,  however,  the  increase  was  greater 
than  was  necessary  for  these  purposes,  and  by  the  act  of  1864 
the  average  rate  on  dutiable  commodities  had  risen  to  nearly 
50  per  cent. 

704.  Increase  in  protective  duties.  —  The  high  duties  of 
the  war  period  were  imposed  with  the  idea  that  they  should 
be  repealed  when  the  war  was  over  and  the  country  had  re- 
turned to  normal  business  conditions.  At  the  return  of  peace, 
however,  when  the  internal  taxes  on  manufactures  were  re- 
pealed, and  the  peculiar  conditions  which  had  formed  the  oc- 
casion for  the  high  tariff  no  longer  existed,  the  protective  duties 
were  kept  unchanged  or  were  actually  raised.  The  people  in 
general  did  not  pay  so  much  attention  to  the  tariff  as  to  other 
questions  of  politics,  and  did  not  realize  that  it  was  a  tax  on 
them  as  consumers;  while  the  manufacturers  vigorously  op- 
posed any  reduction.  Duties  which  had  been  raised  by  10 
per  cent  to  30  per  cent  during  the  war  were  kept  at  the  higher 
level  which  they  had  reached,  and  duties  on  some  special 
articles  were  arranged  so  that  they  furnished  the  unprecedented 
protection  of  100  per  cent  or  even  150  per  cent.  The  duty  on 
steel  rails,  for  example,  amounted  to  more  than  the  cost  of 
the  product  which  England  was  ready  to  sell  us,  and  Ameri- 
cans who  built  railroads  about  1880  had  to  pay  $61  to  $67  per 
ton  for  rails  which  could  have  been  purchased  in  England 
lor  $31  to  $36. 


584  A   HISTORY  OF  COMMERCE 

705.  The  tariff  at  the  close  of  the  century.  —  After  1880  a 
reduction  of  the  tariff  was  seriously  urged  by  various  indi- 
viduals and  parties  in  the  country.     The  tariff  was  changed 
in  details,  but  the  general  tendency  was  rather  toward  increase 
than  reduction  of  the  protective  duties.    At  the  close  of  the  cen- 
tury the  average  duty  was  not  far  from  50  per  cent  of  the  value 
of  the  goods.    The  British  Board  of  Trade  estimated  that  the 
important  wares  imported  into  this  country  from  England 
paid  about  70  per  cent.    Such  a  high  tariff  was  unheard  of  in 
earlier  times,  in  the  United  States  or  in  Europe;   and  was  ex- 
ceeded in  1900  only  by  the  tariff  of  Russia.     The  Payne- 
Aldrich  act  of  1909,  the  first  general  revision  of  the  tariff  that 
had  taken  place  for  twelve  years,  amended  some  details  but  left 
its  general  character  unchanged;    the  Underwood  act  of  1913 
went  further,  and  is  credited  by  a  competent  authority  with 
making  the  greatest  change  in  the  tariff  system  since  the  Civil 
War.     It  made  considerable  reductions  on  some  items,  but 
left  rates  as  high  as  before  on  about  half  of  the  chief  dutiable 
commodities  imported.     Before  the  effect  of  this  last  measure 
could  fairly  be  judged  the  outbreak  of  the  war  in  Europe  set 
loose  forces  which  changed  the  currents  of  the  world's  trade 
with  little  regard  to  the  policies  of  lawmakers. 

706.  Leading  ports,   1860-1914.  —  The  continued  impor- 
tance of  the  eastern  seaboard,  in  the  foreign  trade  of  the 
country,  is  shown  by  the  fact  that  in  1913  nearly  two -thirds 
(64  per  cent)  of  the  total  commerce  in  merchandise  passed 
through  the  Atlantic  ports.    It  should  however  be  noted  that 
these  ports  were  declining  in  relative  importance;    in  1900 
they  enjoyed  nearly  three  quarters  (73  per  cent)  of  the  whole. 
Next  in  rank  were  the  ports  of  the  Gulf  of  Mexico  (1913, 
15  per  cent),  and  the  customs  houses  on  the  northern  frontier, 
(12  per  cent)  ;  commerce  by  the  southern  and  northern  gate- 
ways was  growing  more  rapidly  than  the  old  established  trade 
by  the  Atlantic.    In  comparison  the  trade  of  the  Pacific  Coast 
(6  per  cent)  was  unimportant. 

The  port  of  New  York  still  stood  without  a  rival  in  impor- 


IMPORTS,   DIRECTION  OF   COMMERCE,    1860-1914      585 

tance.  Over  one  half  of  the  total  imports  was  received  through 
its  harbor,  and  though  its  share  of  exports  was  smaller,  it 
conducted  nearly  half  (46  per  cent)  of  the  total  trade  of  the 
country.  No  other  port  had  as  much  as  10  per  cent.  New 
York  stood  even  higher,  however,  in  the  middle  of  the  period 
(56  per  cent  in  1882),  and  the  tendency  of  recent  years  had 
been  to  distribute  among  other  ports  an  increasing  share  of 
our  great  foreign  trade.  The  concentration  of  traffic  at  the 
New  York  gateway  had  apparently  led  to  congestion,  entail- 
ing heavy  charges  and  delays,  and  encouraging  the  use  of 
transportation  lines  to  other  ports  whose  facilities  were  not 
so  thoroughly  exploited.  There  have  been  many  changes  in 
the  relative  standing  of  the  individual  ports;  the  order  of  their 
importance  in  1913  was  as  follows,  the  figures  giving  the  per- 
centage of  the  total  commerce  of  the  country  (values  of 
merchandise  imports  and  exports)  passing  through  each: 
Galveston,  7;  New  Orleans,  6;  Boston,  5;  Philadelphia,  4; 
Baltimore,  San  Francisco,  and  Puget  Sound,  3  each.  The 
Gulf  ports  owed  their  position  mainly  to  their  export  trade, 
in  which  cotton  was  the  leading  item;  the  secondary  ports 
on  the  Atlantic  seaboard  had  a  more  diversified  traffic,  by  which 
the  pressure  on  the  port  of  New  York  was  somewhat  relieved. 
707.  Direction  of  commerce  abroad.  —  The  changes  in  the 
distribution  of  our  foreign  trade  from  1860  to  1913  are  appar- 
ent in  the  following  table,  which  gives  the  percentage,  in  round 
numbers,  of  the  total  exports  and  imports  of  the  United  States 
in  its  commerce  with  the  great  divisions  of  the  world.  For 
convenience  of  comparison  the  figures  for  1800  are  included: 


Imports  of  U.S.  from  — 

Exports  of  U.S.  to  — 

1800 

I860 

1913 

1800 

I860 

1913 

Europe  

51 
35 

13 
1 

60 
21 
10 
7 
1 
1 

49 
20 
12 
15 
2 
1 

58 
38 

2 
2 

78 
13 
4 
3 
1 
1 

60 
25 
6 
5 
3 
1 

North  America    

South  America  

Asia     

Oceania      

Africa                   

586  A  HISTORY  OF  COMMERCE 

708.  Relative  commercial  importance  of  different  parts  of 
the  world.  —  The  figures  bring  out  in  a  striking  manner  the 
close  connection  of  commerce  and  civilization.    The  continent 
of  Europe,  in  spite  of  its  small  area  and  in  spite  of  its  inferiority 
to  Asia  in  population,  contributed  far  more  than  half  of  our 
commerce  throughout  the  century.     The  proportion  of  our 
trade  with  Europe  grew  during  the  first  part  of  the  century, 
to  decline  again  during  the  latter  part,  leaving  the  figures 
for  1913  very  nearly  equal  to  those  of  1800.    The  percentage 
share  of  imports  from  Europe  reached  its  peak  before  the 
Civil  War  (1850,  70  per  cent);    the  greatest  concentration  of 
exports  in  the  direction  of  Europe  came  later  (1880,  86  per 
cent).     Even  in  1913  the  trade  with  Europe  exceeded  in  im- 
portance that  with  all  other  parts  of  the  world  together. 

The  commerce  with  our  immediate  neighbors  in  North 
America  shrank  in  importance  in  the  first  half  of  the  nineteenth 
century,  when  the  countries  of  this  continent  were  rivals  in 
the  export  of  raw  materials  to  Europe,  but  showed  a  recovery 
in  more  recent  years,  when  the  diversification  of  industries 
in  the  United  States  encouraged  exports  from  this  country  of 
a  kind  that  had  formerly  been  obtained  from  the  Old  World. 
In  comparison  with  these  two  most  important  parts  of  our 
trade  the  remaining  branches  showed  a  gain,  but  one  which 
was  in  absolute  figures  so  small  that  it  gave  no  reason  to  expect 
any  sweeping  change  in  the  direction  of  our  commercial  in- 
terests. In  the  markets  of  South  America  and  Asia  we  ap- 
peared still  as  buyers  rather  than  sellers,  importing  from  those 
continents  special  foodstuffs  and  raw  materials  for  industry, 
but  exporting  to  them  a  relatively  small  share  of  our  own 
products.  Trade  with  Oceania  and  Africa  had  grown,  with 
the  growth  of  a  civilized  population  in  those  parts,  but  re- 
mained still  only  a  small  fraction  of  our  aggregate  commerce. 

709.  Importance    of    the    English   trade.  —  England    still 
headed  the  list  of  the  countries  with  which  we  traded.     Our 
imports  from  the  United  Kingdom  in  1913  formed  16  per  cent 
of  our  total  import  trade,  exceeding,  therefore,  our  imports 


588  A  HISTORY  OF  COMMERCE 

from  the  whole  continent  of  Asia  or  from  the  continents  of 
South  America,  Oceania  and  Africa  together;  while  our  exports 
to  the  United  Kingdom  formed  nearly  one  quarter  (24  per 
cent)  of  the  total  exports,  and  exceeded  the  aggregate  of  our 
exports  to  all  four  continents  named  above.  The  country 
which  stood  next  in  importance  in  our  commercial  relations  in 
1913  was  another  English-speaking  country,  our  Canadian 
neighbor,  and  the  value  of  our  commerce  with  these  two  mem- 
bers of  the  British  Empire  was  almost  exactly  one-third  of 
the  total  value  of  our  foreign  trade. 

710.  Trade  with  other  countries :   Europe.  —  The  relative 
importance  of  other  countries  in  their  commercial  relations 
with  the  United  States  can  be  seen  in  the  following  list,  which 
gives  the  share  each  took  in  our  total  commerce  in  merchandise 
in  1913:    United  Kingdom,  21  per  cent;    Canada,   13;  Ger- 
many, 12;  France,  7;  Cuba,  5;  Netherland,  Brazil  and  Japan, 
4  each;  Mexico,  British  East  India,  Italy  and  Belgium,  3  each. 
An  extension  of  this  list  would  confuse  rather  than  aid  the 
student.    If  we  divide  the  twelve  countries  named  into  groups 
of  four  we  find  that  the  first  group,  four  countries,  accounted 
for -more  than  one  half  of  our  total  commerce;    the  first  two 
groups,  eight  countries,  accounted  for  more  than  two-thirds;  the 
whole  twelve  together  accounted  for  more  than  three-quarters. 

Among  the  European  states  we  note  that  France  had  not 
kept  her  place  of  relative  importance;  commerce  with  that 
country  had  grown  but  slowly,  and  Germany  had  won  prece- 
dence among  our  customers  in  Continental  Europe  by  her 
high  industrial  development  and  her  growing  demand  for  our 
raw  materials.  Reviewing  the  other  states  of  Europe  the 
reader  will  note  the  absence  from  the  list  of  the  great  empires 
of  Russia  and  Austria-Hungary,  and  the  presence  of  such  little 
states  as  the  Netherlands  and  Belgium.  Area  and  population 
are  obviously  factors  which  have  no  decisive  influence  on 
the  commercial  importance  of  a  country. 

711.  The  Americas    and    Asia.  —  Attention    has    already 
been  directed  to  the  fact  that  although  the  major  part  of  our 


589 

commercial  interests  still  lay  in  Europe  the  concentration  of 
our  interests  there  had  grown  gradually  less  with  the  passage 
of  time.  The  reader  will  note  the  evidence  of  this  tendency  to 
dispersion  in  the  fact  that  of  the  twelve  countries  named  as 
the  most  important  in  their  commercial  relations  with  the 
United  States  in  1913,  six  were  extra-European.  Two  of  these 
were  our  immediate  neighbors  in  North  America;  exchange 
with  these  countries  became  more  active  as  the  United  States 
took  on  the  character  of  an  industrial  state,  offering  finished 
products  for  the  raw  materials  of  industry.  The  other  two 
American  states  on  the  list  owed  the  importance  of  their 
position  in  our  trade  largely  to  their  ability  to  meet  special 
demands  of  the  American  consumer,  for  sugar  and  for  coffee 
respectively.  These  and  other  states  to  the  south  of  us  made 
relatively  small  purchases  in  the  American  market.  Our  re- 
lations with  British  East  India  were  of  the  same  kind;  that 
group  of  countries  bought  from  us  in  1913  less  than  one  tenth 
of  the  value  of  the  products  (coarse  textile  fibers,  burlap, 
skins,  etc.)  which  it  sold  to  the  American  importer.  A  tendency 
similar  but  less  marked  showed  itself  in  the  trade  with  Japan 
which  supplied  5  per  cent  of  the  total  American  imports,  but 
took  less  than  3  per  cent  of  our  exports.  Noteworthy  is  the 
absence  from  the  list  of  China,  numbering  over  three  hundred 
million  inhabitants,  but  accounting  for  less  than  2  per  cent 
of  the  trade  of  the  United  States  in  1913. 


QUESTIONS  AND  TOPICS 

1.  Chart  the  figures,  sect.  695,  and  note  the  changes  in  the  relative 
as  well  as  the  absolute  importance  of  different  classes  of  imports. 

2.  Contrast  the  import  trade  of  the  United  States  in  1913  with  that 
of  England  or  of  Germany.    Study  the  indications  of  trade  between  the 
U.  S.  and  other  countries  given  by  these  comparisons. 

3.  The  decline  in  import  of  manufactured  wares  implied  either  that 
the  country  was  growing  poorer,  and  so  was  unable  to  buy  finished  products 
abroad,  or  else  was  growing  more  competent  to  supply  its  own  needs. 
Which  is  the  correct  view? 


590  A   HISTORY  OF  COMMERCE 

4.  What  food  supplies,  used  in  the  household  in  which  you  live,  come 
from  foreign  countries? 

5.  Has  there  been  any  change  in  the  relative  amount  of  foreign  food 
products  consumed  in  your  household  in  the  past  generation? 

6.  If  an  American  farmer  can  get  more  sugar  by  raising  cotton  or 
wheat  and  exchanging  his  surplus,  is  there  any  reason  why  he  should 
raise  sugar? 

7.  The  American  cane  sugar  industry.    [Depew,  chap.  37  by  Searles; 
Pub.  Amer.  Econ.  Assoc.,  1904,  5:    79-98;    Census,  1900,  6:    443-494; 
1910,  10:  477-483;   U.  S.  Bureau  of  Manufactures,  Misc.  Series,  no.  53, 
1917.] 

8.  The  beet  sugar  industry.     [Census,  1900,  9:    543-555;   1910,  10; 
471-477;    Rep.  Ind.  Comm.,  1900,    10:    ccli-cclxxiv;    House  Doc.  398, 
55th  Cong.,  2d  Session;   Poole's  Index.] 

9.  The  chemical  industry  of  the  U.  S.  [Depew,  chap.  63  by  Bowers: 
Census,  1880,  2:  985-1028;  1900,7:  clii,  10:  523-569;  1910,10:  531-550; 
Bureau  of  Foreign  and  Dom.  Commerce,  Misc.  Series,  no.  82,  1919.] 

10.  Write  a  report  on  the  history,  sources  of  supply,  commerce  and 
uses,  of  one  of  the  raw  materials  mentioned  in  sect.  700.    [Encyc.,  com- 
mercial geographies,  U.  S.  Census.] 

11.  Write  a  report  on  one  of  the  following  industries,  with  respect  to 
production  at  home  and  importation  from  abroad: 

(a)  Glass.  [Depew,  chap.  40  by  Gillinder;  Census,  1880,  2:  1029- 
1152,  1900,  9:947ff.;  1910,  10:  975-884;  U.  S.  Bureau  of  manufactures, 
Misc.  Series,  no.  60,  1917.] 

(6)  Earthenware  and  potteries.  [Depew,  chap.  41  by  Moses;  Census, 
1900,  9:  899  ff.;  1910,  10:  849-871;  U.  S.  Bureau  of  Manufactures, 
Misc.  Series,  no.  16,  no.  21.] 

(c)  Hides  and  manufactures  of  leather.    [Depew,  chap.  75  by  Foer- 
derer;    Census,  1900,  9:  699-738;   1910,  10:  717-732.] 

(d)  Boots  and  shoes.     Depew,  chap.  87  by  Rice;    Census,  1900,  9: 
739-767;    1910,  10:   697-714;   U.  S.  Bureau  For.  and  Dom.  Commerce, 
Misc.  Series,  no.  76.] 

[See  Depew  and  Census  for  many  other  industries;  see  Statistical 
Abstract  for  exports  and  imports  of  products  of  industries.] 

12.  Study  in  detail  one  of  the  following  chapters  in  recent  tariff 
policy: 

(a)  The  war  tariff. 

(6)  The  failure  to  reduce  the  tariff  after  the  war. 

(c)  Increase  of  duties  above  war  rates. 

(d)  The  Act  of  1883. 

(e)  The  Act  of  1890  (McKinley  Tariff). 


IMPORTS,   DIRECTION    OF  COMMERCE,    1860-1914.      591 

(/)  The  Act  of  1894  (Wilson  Tariff). 

(0)  The  Act  of  1897  (Dingley  Tariff). 
(h)  The  Act  of  1909  (Payne- Aldrich). 

(1)  The  Act  of  1913  (Underwood). 

[Taussig  or  Mayo-Smith  and  Seligman.  The  student  may  also  con- 
sult tariff  histories  by  Stanwood,  Rabbeno,  etc.,  narrative  histories  and 
contemporary  periodical  articles.] 

13.  The  following  figures  give,  in  millions  of  dollars,  the  commerce 
in  merchandise  passing  through  the  eight  principal  ports  in  1900.    On  a 
sketch  map  of  the  country  draw  lines  from  the  different  ports  propor- 
tional to  the  figures  and  extending  out  to  sea;   thus  giving  graphic  rep- 
resentation of  relative  importance  of  the  ports.    The  first  figure  is  that 
of  imports,  the  second  that  of  exports.   New  York,  1,048,  918;  Galveston, 
8,  281;    New  Orleans,  82,  170;    Boston,  147,  70;    Philadelphia,  93,  76; 
Baltimore,  33,  116;    San  Francisco,  63,  66;   Puget  Sound,  51,  63. 

14.  The  figures,  sect.  707,  may  best  be  charted  by  the  use  of  colored 
crayons,  giving  each  grand  divi  sion  its  own  color.    Draw  a  line  composed 
of  100  equal  units,  by  the  use  of  dividers  or  a  scale;  a  foot  rule,  divided 
into  sixteenths  of  an  inch,  may  be  employed,  making  the  line  65  inches 
long  (16  X  6j  =100).     Chart  imports  and  exports  separately,  and  study 
the  charts  as  representing  the  relative  importance  of  our  trade  with  the 
different  continents  at  different  periods. 

15.  Note  carefully  that  the  figures  of  the  text,  page  585,  are  percent- 
ages, not  total  values.    The  total  values  are  given  below,  with  a  slight 
difference  of  arrangement;  each  unit  of  the  figures  represents  ten  million 
dollars,  and  dashes  are  inserted  when  the  values  do  not  come  within  one 
decimal  place  of  a  unit. 

(Units  of  ten  million  dollars.) 


18 

00 

is 

60 

191 

3 

Imports 

Exports 

Imports 

Exports 

Imports 

Exports 

Europe  

5 

4 

22 

31 

89 

148 

North  America.  .  . 
Asia  

3 
1 

3 
0.1 

8 
3 

5 
1 

36 
28 

62 
12 

South  America  .  .  . 
Oceania  

4 
0.3 

2 
0.5 

22 
4 

15 

8 

Africa  

0.1 

0.1 

0.4 

0.3 

3 

3 

592  A   HISTORY  OF  COMMERCE 

To  illustrate  the  use  of  the  figures:  the  imports  from  Oceania  in  1860 
were  roughly  three  million  dollars  in  value,  in  1913,  forty  millions  (the 
precise  figure  was  $37,543,441). 

The  figures  may  be  used  in  studying  our  commercial  relations  in  the 
following  ways: 

(a)  To  show  the  development  of  our  commerce  with  different  con- 
tinents take  three  large  sheets  of  paper,  for  the  three  different  dates. 
Lay  off  the  largest  figures  (Europe,  1913,  89  imports  plus  148  exports) 
to  a  convenient  scale  at  the  top  of  one  sheet,  and  below  it  draw  other  lines 
showing  the  total  commerce  with  each  of  the  other  grand  divisions  at 
that  date.  Distinguish  either  imports  or  exports  by  the  use  of  wavy  or 
dotted  lines.  Prepare  the  other  charts,  using  the  same  scale.  These 
charts  will  show  the  growth  of  American  commerce,  while  the  charts  based 
on  figures  in  the  text  show  only  changes  in  proportion. 

(ft)  To  show  the  relative  commercial  importance  of  the  continents 
(excluding  Oceania)  at  a  certain  time,  as  in  1913,  the  following  method 
may  be  adopted.  Rule  a  sheet  of  paper  in  equal  squares,  or  procure  a 
sheet  of  plotting  paper  already  ruled.  Draw  on  the  paper  a  map  of  Europe 
to  such  a  scale  that  the  land  area  will  include  as  nearly  as  possible  237 
squares  (89  imports  plus  148  exports.)  Exactness  is  impracticable, 
but  a  few  experiments  should  make  the  result  sufficiently  accurate;  an 
error  of  10  or  20  squares  is  of  little  importance.  Draw  then  the  maps  of 
the  other  continents  so  that  each  one  contains  the  number  of  squares 
corresponding  to  its  share  in  our  trade  (North  America,  exclusive  of  U.  S., 
98;  Asia,  40;  South  America,  37,  etc.).  The  contrast  between  the  con- 
tinents will  be  sufficiently  striking  even  if  other  maps,  showing  the  con- 
tinents in  their  true  proportions,  are  not  made  for  comparison. 

16.  Methods  similar  to  those  already  employed  may  be  used  in  study- 
ing the  commerce  of  the  U.  S.  with  separate  countries.  Full  statistical 
information  is  comprised  in  the  Reports  on  Commerce  and  Navigations. 

BIBLIOGRAPHY 
See  chapter  li. 

TOPICS  FOR  REVIEW 

The  following  topics  are  suggested  for  use  in  a  general  review  of 
American  commerce:  (a)  history  of  American  shipping;  (6)  transportation 
by  road,  river,  canal  and  lake;  (c)  transportation  by  railroad;  (d)  produc- 
tion and  exchange  of  wheat  and  flour;  (e)  cotton;  (/)  animal  products; 
(g)  textiles,  (cotton,  wool,  silk);  (h)  iron  and  steel;  (i)  other  mineral 
products;  (j )  commerce  with  European  countries;  (k)  commerce  with 
Asia;  (I)  commerce  with  the  West  Indies  and  South  America;  (m)  history 
of  American  seaports;  (ri)  tariff  history. 


PART  VI.— THE  WORLD  WAR 

CHAPTER  LTV 
COMMERCE  AND   THE  WORLD   WAR,   1914-1918 

712.  Commercial  antecedents   of  the  war.  —  To  picture 
the  World  War  of  1914-18  as  a  necessary  result  of  the  com- 
mercial conditions  in  the  period  immediately  preceding  would 
be  a  distortion  of  the  facts.    The  recourse  to  arms  is  a  volun- 
tary act,  and  this  war,  like  others  preceding  it,  would  not  have 
taken  place  if  one  party  to  it  had  not  consciously  chosen  to  use 
force  to  obtain  what  it  wanted.     War  is  never  a  necessary 
and  inevitable  result  of  economic  conditions.     On  the  other 
hand,  there  are  periods  in  which  commercial  competition  is 
so  intense  that  it  puts  a  strain  on  international  relations,  tempt- 
ing one  or  another  party  in  the  struggle  to  further  the  interests 
of  its  people  by  threats  of  force  or  by  force  itself.     The  eco- 
nomic strain  is  particularly  likely  to  lead  to  rupture  if  the  po- 
litical system  of  the  period  is  faulty,  if  international  politics 
provide  no  effective  way  for  the  just  settlement  of  differences, 
and  if  national  politics  fail  to  represent  the  interests  of  the 
people  as  a  whole  but  sacrifice  these  to  the  selfish  interests  of 
a  group.    Keen  competition  does  not  cause  war,  but  keen  com- 
petition and  faulty  politics  in  combination  are  apt  to  do  so. 

713.  Germany  and  the  outbreak  of  war.  —  The  danger- 
spot  in  the  international  situation  before  1914  was  Germany. 
That  country  had  achieved  extraordinary  success  in  its  recent 
economic  development.    Its  progress,  moreover,  was  due  only 
in  minor  degree  to  its  endowment  of  natural  resources;    it 
proceeded  from  the  industrial  virtues  of  the  people,  from  the 
efficiency  of  the  organization,  and  from  the  leadership  of  scien- 

593 


594  A   HISTORY  OF  COMMERCE 

tific  experts.  The  Germans  were  proud,  and  had  a  right  to 
be  proud,  of  their  success.  They  could  not  complain  of  the 
reward  which  had  been  accorded  them.  They  were  troubled, 
however,  about  their  future.  They  had  come  to  depend  upon 
world-trade,  and  found  the  world  largely  under  the  political 
control  of  rival  states.  It  is  true  that  in  that  very  world  they 
enjoyed  abounding  prosperity;  but  the  foundations  of  their 
prosperity  appeared  to  them  uncertain.  Inheriting  anti- 
quated ideas  about  the  power  of  the  state  to  guide  economic 
development  and  to  further  commercial  interests,  they  im- 
puted to  other  countries  political  designs  which  were  the 
products  of  their  own  peculiar  ways  of  thought.  They  saw 
in  the  high  tariffs  of  the  United  States  and  Russia,  in  the 
spread  of  the  idea  of  a  customs  union  in  the  British  Empire, 
in  the  expansion  of  French  influence  in  Morocco,  so  many 
evidences  of  a  plan  of  their  rivals  to  hem  them  in,  and  misuse 
political  power  to  rob  them  of  their  deserts.  Should  they  not, 
before  it  was  too  late,  "break  through  the  iron  circle,"  estab- 
lish a  great  state  in  central  Europe  extending  down  to  the 
Mediterranean  and  the  Persian  Gulf,  take  the  place  in  "world- 
politics"  which  accorded  with  their  economic  merits,  and 
so  —  for  this  was  the  sincere  conviction  of  many  Germans 
—  not  merely  win  their  own  "place  in  the  sun,"  but  also  di- 
rect in  the  right  path  the  civilization  of  the  world  as  a  whole? 
Given  the  prevalence  of  ideas  like  these,  given  an  antiquated 
political  system  that  allowed  exaggerated  influence  to  dynastic 
and  military  interests,  and  the  forces  impelling  Germany  to 
war  were  strong;  given  the  old-fashioned  and  outworn  system 
of  international  diplomacy,  the  stress  was  irresistible  and  the 
rupture  came. 

714.  Direct  costs  of  the  war. —  For  generations  to  come  the 
effects  of  the  "World  War  will  be  working  themselves  out.  This 
chapter  and  the  following  will  attempt  merely  a  survey  of 
some  of  the  more  obvious  effects  upon  the  history  of  commerce. 
It  will  be  convenient  to  have  at  hand  for  reference  some  esti- 
mates of  the  costs  of  the  war,  and  the  table  gives  those  that 


COMMERCE  AND   THE  WORLD   WAR,  1914-1918       595 


were  represented  by  the  direct  expenditure  of  money  by  the 
states  involved.  Some  of  the  states  advanced  funds  to  their 
allies  for  the  prosecution  of  the  war,  so  a  distinction  is  made 
between  the  gross  sums  raised,  and  the  sums  directly  expended 
by  each  country;  the  cost  of  the  war  would  be  exaggerated 
if  the  same  sum  were  counted  twice.  On  the  other  hand  it 
is  apparent  that  the  table  of  net  cost  is  an  accurate  measure 
of  the  burden  of  the  war  on  different  countries  only  on  con- 
dition that  the  advances  to  allies  are  treated  as  interest-bearing 
loans.  To  assist  in  an  appreciation  of  the  meaning  of  the  costs 
estimates  are  supplied  for  some  countries  of  the  total  national 
wealth  in  1914. 

(Approximate  figures  in  milliards  of  dollars) 


National 
wealth 

Gross 
cost 

Advances 
to  allies 

Net  cost 

United  States  

204 

32 

9 

23 

United  Kingdom  

71 

44 

9 

35 

Rest  of  British  Empire  
France  

58 

4 
26 

2 

4 
24 

Russia  

58 

23 

23 

Italy  

22 

12 

12 

Other  Entente  allies   

4 

4 

Total    

145 

20 

125 

Germany  

81 

40 

2 

38 

Austria-Hungary  

30 

21 

21 

Turkey  and  Bulgaria  

2 

2 

Total  

63 

2 

61 

Grand  total  

208 

22 

186 

715.  Indirect  costs  of  the  war.  —  Even  the  figures  of  direct 
costs  are  subject  to  correction  on  various  accounts,  and  must 
be  taken  merely  as  approximate  indications  of  the  value  of  the 
wealth  that  was  devoted  to  destruction.  Still  more  uncertain, 


596  A  HISTORY  OF  COMMERCE 

necessarily,  are  the  estimates  of  losses  due  to  the  war  which 
were  not  recorded  in  the  expenditures  of  governments.  Figures 
in  the  accompanying  table  give  some  idea  of  the  nature  and 
extent  of  these  indirect  costs. 

INDIRECT  COSTS  OP  THE  WAR 
(Figures  in  milliards  of  dollars) 

Money  value  of  lives  lost,  military 34 

Money  value  of  lives  lost,  civilian 34 

Property  losses  on  land 30 

Property  losses  at  sea 7 

Loss  of  production  by  diversion  of  labor. 45 

Voluntary  war  relief 1 

Loss  to  neutrals 2 

Total 153 

Grand  total,  direct  and  indirect  costs 339 

A  few  words  of  explanation  will  make  some  of  the  items  more 
clear.  Human  beings  have  not,  since  the  days  of  slavery,  been 
counted  in  a  census  of  national  wealth,  but  they  represent  never- 
theless in  every  country  the  heaviest  investment  and  the  larg- 
est source  of  income.  The  figures  in  the  text  are  based  on  the 
assumption  of  about  13  million  deaths  in  military  service,  and 
a  money  value  of  the  individual  ranging  from  about  $2,000 
(southern  and  eastern  Europe)  to  $5,000  (United  States).  The 
assumption  that  the  war  caused  at  least  as  heavy  a  loss  in  the 
civil  as  in  the  military  population  is  probably  conservative. 
The  loss  due  to  the  diversion  of  labor  from  production  is 
figured  on  the  basis  of  20  million  men,  of  an  average  produc- 
tive capacity  of  $500  a  year,  withdrawn  from  industry  for  four 
and  one  half  years. 

716.  Effects  of  the  war  on  commerce.  —  In  a  modern 
country  there  is  a  small  group  of  men  known  as  wreckers, 
whose  business  it  is  to  tear  down  and  destroy.  During  the 
war  the  world  went  into  the  wrecking  business  on  a  grand 
scale.  The  figure  of  twenty  million  men  engaged  in  it  is  an 


COMMERCE  AND   THE  WORLD   WAR,   1914-1918       597 

average  for  the  whole  period;  at  the  close  of  the  war  nearly 
double  that  number  were  under  arms.  We  have  now  to  study 
some  of  the  effects  of  this  situation  on  commerce. 

In  every  country  that  entered  the  war  there  was  an  im- 
mediate and  imperative  demand  for  the  tools  of  the  wrecking 
trade,  first  of  all  for  guns  and  ammunition.  The  wrecker  was 
engaged  in  an  arduous  occupation;  he  demanded  more  food 
than  he  had  been  used  to  consume,  and  wasted  more;  he 
used  up  clothes  and  shoes  and  implements  at  an  appalling 
rate;  he  was  always  on  the  road,  requiring  subsistence  and 
shelter  in  all  sorts  of  out-of-the-way  places.  War  therefore 
put  an  immediate  strain  on  the  industries  serving  these  needs: 
chemical,  metallurgical,  agricultural,  textile,  and  the  industries 
providing  and  operating  the  equipment  of  transportation  on 
land  and  water.  On  the  other  hand  war  withdrew  workers 
from  constructive  industry,  and  restricted  supply  at  the  very 
time  it  intensified  demand.  Every  country  at  war,  therefore, 
sought  by  means  of  commerce  to  relieve  the  strain  on  its  own 
resources,  importing  needed  supplies  from  abroad;  each  group 
of  belligerents  sought  to  prevent  the  other  group  from  profiting 
by  this  process.  The  tendency  to  an  increase  of  imports  was 
accompanied  by  a  tendency  to  a  decline  in  exports.  A  country 
at  war  could  not  afford  to  do  business  as  usual  in  its  foreign 
trade.  If  it  could  supply  its  military  necessities  by  paying 
actual  cash  for  its  imports,  or  by  promising  to  pay  for  them  at 
some  future  time,  it  could  withdraw  workers  from  export 
industries,  serving  the  needs  of  foreigners,  and  make  them 
serve  more  pressing  needs  at  home. 

717.  Commercial  position  of  the  Central  Powers  and  of 
the  Entente.  —  Germany  and  her  allies,  Austria-Hungary, 
Bulgaria,  Turkey,  enjoyed  a  great  military  advantage  of 
which  the  character  is  suggested  by  their  name,  the  Central 
Powers;  they  had  interior  lines  of  communication  and  could 
move  their  forces  from  one  to  another  front  much  more  easily 
than  could  their  opponents.  They  would  have  enjoyed  a  cor- 
responding commercial  advantage  if  they  could  have  brought 


598  A  HISTORY  OF  COMMERCE 

the  war  to  a  conclusion  with  stocks  of  supplies  accumulated 
at  home  or  acquired  in  invaded  territory,  which  they  could 
mobilize  in  one  part  or  another  of  their  territory  as  they  pleased. 
The  powers  of  the  Entente,  on  the  other  hand,  desired  in  vain 
to  effect  an  exchange  of  the  wheat  of  Russia  for  the  guns  and 
ammunition  of  France  or  England.  In  a  long  war,  however, 
in  which  the  decision  was  to  be  effected  not  by  stocks  accumu- 
lated in  the  countries  immediately  engaged  but  by  a  mobiliza- 
tion of  the  resources  and  activities  of  the  whole  world,  the 
Central  Powers  were  at  a  critical  disadvantage.  They  had 
immediately  open  to  them  only  the  territory  of  small  neutral 
states  (the  Netherlands,  Switzerland,  the  Scandinavian  states); 
the  path  to  richer  sources  of  supply  lay  across  the  sea;  and 
control  of  the  sea  rested,  from  the  beginning  to  the  end  of  the 
war,  in  the  hands  of  the  Entente. 

718.  The  war  against  commerce.  —  The  conditions  were 
much  like  those  of  a  hundred  years  before,  when  England  was 
engaged  in  the  desperate  struggle  with  Napoleon.  In  neither 
period  had  the  belligerents  any  scruple  in  departing  from 
established  principles  of  International  law.  The  Entente 
{proposed  to  starve  Germany  into  surrender.  It  stopped  the 
outlets  of  Germany  across  the  territory  of  neutral  states  by 
edict*  which  amounted  in  substance  to  a  rationing  of  the 
people  of  those  states;  these  people  might  have  enough  food, 
fodder,  cotton,  etc.,  for  their  own  immediate  needs,  but  no 
surplus  that  they  might  transfer  to  Germany.  Germany 
protested  against  this  infraction  of  the  principle  of  freedom 
of  the  seas,  and  retaliated  by  proclaiming  a  war  zone  about  the 
British  islands,  within  which  German  submarines  ruthlessly 
destroyed  the  merchant  shipping  on  which  England  depended 
for  her  supply  of  food.  These  measures  on  either  side,  took 
shape  in  the  early  years  of  the  war.  The  measures  of  the 
Entente  were  effective  in  sealing  the  Central  Powers  from 
commercial  intercourse  with  the  outside  world.  The  German 
policy  failed.  It  remained  a  menace,  which  grew  more  serious 
in  the  latter  part  of  the  war  when  the  danger  to  England  was 


COMMERCE  AND   THE  WORLD   WAR,   1914-1918       599 

very  real,  but  in  its  moral  influence,  instead  of  breaking  the 
spirit  of  the  English,  it  did  much  to  rouse  the  spirit  of  neutral 
countries.  As  the  occasion  for  the  entry  into  the  war  of  the 
United  States  on  the  side  of  the  Entente  it  was  a  decisive 
factor  in  bringing  the  conflict  to  a  conclusion. 

719.  The  war  on  shipping.  —  The  war  on  shipping  resulted 
in  the  destruction  by  enemy  action  of  a  tonnage  amounting 
to  more  than  one  quarter  of  the  world's  total  tonnage  in  1914. 
The  figures  in  the  following  table  indicate  the  extent  and 
distribution  of  the  losses,  and  show  at  the  same  time  how 
rapidly  they  were  repaired  by  the  construction  of  new  ships. 
Changes  in  the  relative  standing  of  the  different  countries 
were  affected  also  by  another  factor,  namely  by  the  distri- 
bution among  other  countries  of  ships  of  the  Central  Powers, 
taken  during  and  after  the  war.  Germany  was  second  in  rank 
among  maritime  nations  in  1914,  with  a  tonnage  of  5.5  million; 
in  1920  its  tonnage  had  been  reduced  to  less  than  1  million, 
almost  entirely  by  forced  transfer. 

(Figures  in  millions  of  gross  tons) 


Tonnage,  1914 

War  losses 

Tonnage,  1920 

United  Kingdom  

21.0 

7.8 

20.6 

United  States  *  

5.4 

0.4 

16.0 

France  

2.3 

0.9 

3.2 

Japan  

1.7 

0.1 

3.0 

Italy  

1.7 

0.8 

2.2 

Norway  

2.5 

1.2 

2.2 

Total  of  these  items  

34.6 

11.2 

47.2 

Total  for  world  

49.1 

13.0 

57.3 

*  The  figures  of  the  table,  quoted  from  Lloyd's  Register  in  Report 
U.S.  Department  of  Commerce,  1920,  p.  170,  differ  slightly  from  U.S. 
official  figures.  It  should  be  noted  that  the  gross  tonnage  of  American 
vessels  employed  in  foreign  trade  was  very  much  less:  1.0  million  in  1914, 
9.9  million  in  1920,  according  to  official  figures. 


600  A   HISTORY  OF  COMMERCE 

720.  Influence  of  the  war  on  the  issue  of  paper  money.  — 
War  is  itself  abnormal.     Naturally,  the  World  War  gave  a 
peculiar  cast  to  the  comm  rce  of  the  period  and  left  behind  it 
commercial   conditions   very   different   from   those   that   had 
prevailed  in  the  earlier  period  of  peace.    These  results  of  the 
war  involve  reference  to  questions  of  currency  and  foreign  ex- 
change which  can  be  treated  only  superficially  in  a  book  on 
the  history  of  commerce,  but  which  were  of  such  practical 
importance  that  they  cannot  be  omitted  altogether. 

The  governments  involved  in  the  war  had,  of  course,  to 
strain  every  resource  to  get  the  funds  for  their  necessary  ex- 
penditures. An  expedient  which  they  all  adopted  was  the 
issue  of  paper  money.  Let  us  consider,  to  illustrate  the  mat- 
ter, the  case  of  a  country  which  had  been  doing  business 
with  a  gold  currency  of  say  100,  using  that  figure  to  express 
the  number  of  million  francs,  marks,  dollars  or  other  unit. 
If  the  government  now  printed  10  of  paper  money  and  used 
these  to  meet  its  extraordinary  expenses,  there  would  be  a 
total  of  110  in  circulation.  Price  wyould  rise  roughly  to  cor- 
respond; that  is,  the  unit  would  buy  less  than  before.  The 
gold  unit  would,  however,  be  worth  roughly  as  much  in  other 
countries  as  it  was  before,  and  would  be  sent  abroad  to  make 
purchases,  instead  of  being  used  at  home  where  its  purchasing 
power  was  diluted,  as  it  were,  by  the  issue  of  the  paper  units. 
After  a  period  of  readjustment  10  of  gold  would  have  gone  out; 
the  currency  would  have  returned  to  its  former  level.  The 
government  has  made  a  net  gain  of  10,  for  the  paper  money 
cost  practically  nothing  to  print.  Has  anybody  lost?  No; 
not  if  the  paper  money  circulates  readily  at  home,  and  does 
the  work  which  an  equal  amount  of  gold  money  had  formerly 
done.  The  country  has  simply  "realized"  part  of  its  gold  stock, 
using  a  cheap  substitute  for  money  purposes,  and  selling  the 
dear  gold  to  other  people  who  were  glad  to  exchange  products 
for  it. 

721.  Effect  upon  the  flow  of  gold.  —  From  the  very  begin- 
ning of  the  war  the  governments  of  the  European  states  prac* 


COMMERCE  AND  THE  WORLD  WAR,  1914-1918       601 

tised  this  expedient,  paying  out  paper  money  and  getting  in 
return  for  it  the  goods  and  services  which  they  needed  for 
military  operations.  Gold  went  out  of  circulation  and  was 
replaced  by  paper.  The  government  did  not  choose,  however, 
to  let  private  individuals  profit  by  the  exchange  of  this  gold 
with  people  abroad.  By  an  appeal  to  patriotism  and  by  the 
threat  of  penalties  each  government  sought  to  bring  into  its 
own  treasury  *  the  gold  which  had  been  in  the  pockets  and  in 
the  cash-boxes  of  its  people.  It  opened  the  way  for  the  cir- 
culation of  its  paper  as  well  by  locking  up  gold  in  its  vaults 
as  by  sending  it  abroad.  It  cherished  the  gold  as  a  precious 
asset:  a  sign  of  solvency  and  a  ready  resource  in  time  of  need. 
The  gold  reserves  of  some  of  the  belligerents  increased  con- 
siderably in  the  course  of  the  war. 

GOLD  RESERVES  OP  EUROPEAN  BELLIGERENTS 
(Figures  in  millions  of  dollars) 

1913  1918 

United  Kingdom ~170  ~528 

France 679  664 

Italy 288  244 

Germany 279  539 

Austria-Hungary 251  53 

These  gold  reserves,  as  the  name  implies,  were  not  in  active 
circulation.  Gold  passed  entirely  out  of  circulation.  It 
flowed  into  the  treasury,  and  part  of  it  was  retained  there. 
The  larger  part  flowed  through  the  treasury,  and  was  employed 
by  the  government  in  purchase  of  war  material  abroad.  Some 
part  of  this  outflow  from  the  belligerent  states  remained  in 
Europe;  Spain  and  the  Netherlands  showed  in  the  course  of 
the  war  a  notable  increase  in  their  gold  holdings.  By  far 
the  greater  part  of  the  gold  left  Europe  altogether,  most 
of  it  going  to  the  United  States,  very  considerable  amounts 
going  to  the  Far  East  and  to  South  America. 

*  I  do  not  pretend  to  recognize  technical  distinctions  in  this  ele- 
mentary exposition. 


602  A  HISTORY  OF  COMMERCE 

722.  Over-issue  of  paper  money;   worldwide  inflation. — 
Let  us  return  now  to  a  consideration  of  the  case  which  was 
assumed  to  illustrate  the  working  of  paper  money.    If  we  sup- 
pose the  government  issues  10  units,  20  units,  and  so  on  up  to 
100  units  we  may  assume  in  each  case  that  a  corresponding 
amount  of  gold  is  driven  out  of  circulation,  to  be  impounded 
in  the  treasury  or  sent  abroad;  in  either  event  the  number  of 
units  in  circulation  and  the  price  level  remain  the  same  as 
before.     Suppose  the  issue  of  an  additional  100.     The  paper 
money  has  no  value  abroad.     The  government  will  not  keep 
it  in  the  treasury.    The  government  would  not  have  issued  it 
except  as  a  means  of  purchasing  services  or  supplies,  and  must 
reissue  it  when  it  comes  back  to  the  treasury  in  the  payment 
of  taxes,  else  it  would  renounce  all  its  advantages  in  the  col- 
lection of  the  tax.    There  would  be  left  then  double  the  number 
of  units  in  circulation;    prices  would  double;    the  unit  would 
buy  only  half  as  much  as  before.    Depreciation  would  follow 
inflation.     The  government  would  gain  still  by  the  issue  of 
paper  money,  but  it  would  have  to  issue  twice  as  many  units 
as  before  to  get  a  given  purchasing  power;    the  dose  would 
need  to  be  constantly  increased  to  produce  a  given  effect. 
Furthermore,  the  government  from  now  on  would  get  its  gain 
only  at  the  expense  of  its,  people.     Its  gain  would  be  offset 
all  along  the  line  by  the  losses  of  individuals  who  would  receive 
for  their  services  and  products  perhaps  a  greater  number  of 
monetary  units  but  certainly  a  smaller  actual  purchasing  power. 

Not  even  the  neutral  countries  could  escape  the  effects  of 
the  issue  of  paper  money  by  the  belligerents.  Even  when  they 
remained  on  a  gold  basis  they  had  now  so  many  more  units, 
driven  out  from  the  belligerent  countries,  that  the  gold  unit 
itself  depreciated.  The  dilution  of  currency  spread  over  the 
world  and  resulted  in  a  world-wide  inflation. 

723.  Statistics  of  currency  inflation  and  of  prices.  —  I  have 
described  conditions,  in  preceding  sections,  in  an  artificially 
simple  form,  and  have  neglected  many  elements  that  would 
have  to  be  included  if  there  were  space  for  a  more  precise  and 


COMMERCE  AND   THE   WORLD   WAR,   1914-1918       603 

complete  treatment.  The  general  tendencies  and  results  were 
in  rough  accordance  with  the  description  given,  as  may  be  seen 
from  the  figures  of  the  table  below.  In  both  columns  the  year 
1913  is  taken  as  the  basis  of  comparison;  the  increase  of  cur- 
rency of  all  kinds,  and  of  wholesale  prices,  may  be  measured 
by  comparing  the  figures  given  for  1919  with  par,  100,  in  1913. 

Units  of  Average,  of 

currency  wholesale  prices 

United  Kingdom 244  257 

France 365  330 

United  States 173  206 

The  inflation  of  currency  and  prices  presented  in  these 
figures  was  moderate  in  comparison  with  conditions  in  central 
and  eastern  Europe,  where  the  flood  of  paper  money  broke 
all  bounds;  the  quantity  of  currency  in  1919,  compared  with 
1913,  was  in  Germany  875,  in  Rumania  over  1,100,  in  Austria 
and  in  Poland  higher  still. 

724.  Effect  upon  foreign  exchange.  —  Leaving  aside  the 
grave  effects  of  these  rapid  changes  in  the  price  level  on  the 
earnings  and  income  of  different  classes,  there  is  a  particular 
reason  for  studying  them  in  their  relation  to  international 
trade.  We  have  had  occasion  to  note  previous  changes  in  the 
price  level,  such  as  the  rise  in  prices  before  1914;  but  these 
earlier  changes  were  more  moderate,  and  what  is  still  more 
important,  were  about  the  same  in  different  countries.  The 
changes  resulting  from  the  issue  of  paper  money  were  not  only 
more  abrupt;  they  were  different  in  individual  countries,  as 
can  be  seen  from  the  figure  in  the  last  section.  The  price  level 
in  any  country  depended  upon  the  particular  amount  of  paper 
money  which  the  government  of  that  country  felt  obliged  to 
issue.  The  prices  of  Europe  were  no  longer  gold  prices,  steadied 
at  a  common  level  by  tlje  inflow  and  outflow  of  gold;  they  had 
no  common  level,  they  lost  their  former  steadiness.  With 
these  changes  the  time-honored  basis  of  international  trans- 
actions, the  old  par  of  foreign  exchange,  disappeared. 


604  A   HISTORY  OF  COMMERCE 

725.  Par  of  exchange  on  the  gold  standard.  —  The  sig- 
nificance of  the  change  can  be  most  readily  appreciated  if  we 
consider  a  simple  case,  say  that  of  an  English  spinner  who  buys 
raw  cotton  in  the  United  States.    The  American  wants  dollars; 
the  Englishman  has  pounds  sterling  to  offer.     It  does  not 
matter  in  which  unit  the  bargain  is  expressed,  whether  the 
American  gets  the  right  to  draw  an  order  on  the  Englishman 
for  so  many  pounds  sterling  and  sells  this  to  a  bank  for  dollars, 
or  whether  the  price  is  fixed  at  so  many  dollars,  and  the  English- 
man makes  payment  by  buying  a  bill  for  that  amount  with  his 
pounds  sterling.    In  either  event  one  party  to  the  bargain  must 
deal  in  the  monetary  unit  of  the  other.    Under  the  old  system 
both  units  were  perfectly  definite  weights  of  gold.    A  merchant 
knew,  within  narrow  limits,  how  much  he  had  to  pay  or  to 
receive.    The  gold  in  £1,000  was  equal  to  the  gold  in  $4,866. 
Sterling  exchange  was  at  par  in  New  York  when  the  pound 
was  quoted  at  4.866.    Exchange  could  not  vary  far  from  par, 
for  the  cost  of  shipping  the  gold  itself  was  only  about  two  cents 
per  pound  sterling,  and  the  gold  of  either  country  was  perfectly 
acceptable  in  the  other. 

726.  Foreign  exchange  on  a  paper  standard.  —  Consider 
now  the  situation  after  England  has  driven  gold  out  of  cir- 
culation by  the  over-issue  of  paper  money.    The  pound  sterling 
has  become  a  "paper  pound,"  of  which  the  value  stands  in  no 
fixed  relation  to  a  definite  weight  of  gold,  but  is  determined  by 
a  new  set  of  factors,  particularly  by  the  condition  of  the  English 
treasury  and  the  prospect  of  an  expansion  or  contraction  of 
the  paper  currency.    The  American  can  no  longer  count  with 
any  assurance  on  the  value  to  him  in  dollars  of  a  sum  due  him 
in  pounds  sterling  three  months  hence;   the  Englishman  is  no 
longer  in  a  position  to  calculate  how  many  pounds  sterling  he 
will  need  to  pay  a  debt  contracted  in  dollars.     The  rate  of 
exchange,  instead  of  being  fixed  close  to  4.866,  may  go  down  to 
4.50,  4.00,  3.00  —  there  is  no  limit  to  its  depression  or  to  the 
sharpness  of  its  fluctuations.     The  student  should  note  par- 
ticularly two  elements  which  are  important  in  an  analysis  of 


COMMERCE  AND   THE  WORLD  WAR,   1914-1918        605 

the  situation.  First,  international  transactions  involve  a  con- 
siderable time  interval,  say  three  months,  within  which  events 
may  occur  that  will  make  sweeping  changes  in  rates.  Second, 
the  purchasing  power  of  paper  money  at  home,  where  prices 
are  fixed  by  contract  or  affected  by  custom,  does  not  change  in 
accordance  with  the  rate  at  which  it  is  estimated  in  foreign 
exchange.  As  a  result  there  is  a  "spread  "  in  the  factors  deter- 
mining profit  or  loss  in  international  transactions  which  makes 
foreign  trade  extremely  speculative,  and  makes  its  flow  fitful 
and  irregular. 

QUESTIONS  AND.  TOPICS 

1.  Dangers  arising  from  the  German  political  constitution.    [W.  H. 
Dawson,  What  is  wrong  with  Germany?,  London,  1915;  Veblen,  Imperial 
Germany,  Chap.  5.] 

2.  "German  industry  considered  as  a  factor  making  for  war."     [H. 
Hauser,  Economic  Germany,  London,  1915,  a  pamphlet  of  33  pages.] 

3.  Commercial  aims  of  Germany  in  the  war.    [Snow  and  Krai,  Ger- 
man trade  and  the  war,  Washington,  1918,  pp.  11-14.] 

4.  How  do  you  explain  the  fact  that  the  direct  expenditures  for  war 
by  the  Entente  were  more  than  double  those  of  the  Central  Powers? 

5.  What  portion  of  the  cost  of  the  war  fell  upon  your  individual 
family?    [Tabulate  money  costs  under  taxes,  contributions,  losses.    Who 
bears  the  cost  of  government  bonds?    Estimate  "real"  costs  in  the  form 
of  extra  exertion,  diminished  consumption,  decline  hi  purchasing  power 
of  the  family  income.] 

6.  The  question  of  neutral  rights,  1914-1916.     [Ogg,  National  prog- 
ress, chap.  18;    Paxson,  Recent  history  of  U.  S.,  chap.  44.] 

7.  Assuming  that  both  parties  to  the  European  conflict  departed 
from  established  principles  of  international  law,  why  did  the  United 
States  choose  the  side  of  the  Entente? 

8.  Have  previous  wars  led  to  the  issue  and  over-issue  of  paper  money? 
What  was  the  experience  of  the  United  States  in  the  Revolution;  in  the 
Civil  War? 

9.  Did  your  family  gain  or  lose  by  the  inflation  of  currency  and  the 
rise  of  prices?    Does  the  country  as  a  whole  gam  or  lose  by  these  move- 
ments? 

BIBLIOGRAPHY 

James  D.  Whelpley,  *  The  trade  of  the  world,  N.  Y.,  1913,  is  an  ac- 
count, popularly  written,  of  the  commerce  of  the  more  important  European 
states  just  before  the  outbreak  of  the  war.  General  histories  of  the  war 


606  A   HISTORY  OF  COMMERCE 

give  incidental  attention  to  the  course  of  commerce,  but  treat  fully  only 
the  topic  of  submarine  activity. 

Of  the  references  on  the  responsibility  of  Germany,  given  under  Chap- 
ter XL  and  in  the  Questions  and  Topics  above,  Veblen,  Imperial  Ger- 
many and  the  industrial  revolution,  London,  1915,  is  the  most  thought- 
ful; the  work  by  Snow  and  Krai  is  a  government  report,  Bureau  of  Foreign 
and  Domestic  Commerce,  Misc.  Series  no.  65,  useful  for  matters  of  fact. 

Preliminary  economic  studies  of  the  war,  published  for  the  Carnegie 
Endowment  for  International  Peace  by  the  Oxford  University  Press,  and 
cited  hereafter  under  the  heading  Carnegie  Peace,  comprise  careful  studies 
in  various  parts  of  the  field,  of  which  the  most  important  for  present 
purposes  are  no.  24,  Ernest  L.  Bogart,  Direct  and  indirect  costs  of  the 
great  World  War,  N.  Y.,  1919,  and  no.  9,  J.  Russell  Smith,  Influence  of 
the  great  war  upon  shipping,  N.  Y.,  1919. 

The  topics  of  money,  prices,  and  foreign  exchange  lead  the  student 
into  a  great  mass  of  literature  quite  apart  from  his  usual  sources.  On 
questions  of  fact  a  convenient  compilation  is  presented  by  the  Secretariat 
of  the  League  of  Nations,  Currencies  after  the  war,  London,  1920,  and  a 
wealth  of  material  is  comprised  in  the  reports  of  the  Brussels  International 
Financial  Conference  of  1920.  For  current  facts  and  discussion  see 
Bulletin  of  the  Federal  Reserve  Board  (Washington,  monthly),  The 
Annalist,  a  weekly  publication  of  the  N.  Y.  Times,  and,  besides  the  other 
financial  papers,  the  bulletins  of  New  York  banks  (Federal  Reserve, 
National  City,  Guaranty  Trust).  The  ordinary  student  will  best  employ 
his  time  by  a  careful  review  of  the  principles  of  paper  money  and  of 
foreign  exchange,  as  they  are  presented  in  manuals  of  economics.  F.  W. 
Taussig,  **  Principles  of  economics,  2  vol.,  3d  ed.,  N.  Y.,  1921-1922, 
deserves  particular  recommendation. 


CHAPTER   LV 


THE  UNITED   KINGDOM,   1914-1920 

727.  Statistics  of  English  trade,  1913-1919.  —  Statistics  of 
the  general  trade  of  the  United  Kingdom  in  the  war  period 
are  given  in  the  following  table,  to  which  is  added  a  column 
showing  the  excess  value  of  the  imports  of  merchandise  and  a 
column  showing  the  excess  value  of  the  import  (I),  or  export 
(E),  of  gold. 

(Figures  in  millions  of  pounds  sterling.) 


Total 
imports 

Domestic 
exports 

Foreign 
exports 

Excess 
imports 

Excess 
gold 

1913  

769 

525 

110 

134 

I      13 

1914  

697 

431 

95 

170 

I     28 

1915  

852 

385 

99 

368 

E    29 

1916  

949 

506 

98 

345 

E    21 

1917  

1,064 

527 

70 

467 

E  150 

1918  

1,316 

501 

31 

790 

I     51 

1919  

1,626 

799 

165 

662 

* 

*  Figures  of  gold  movement  for  1917  and  1918  are  unofficial;  figure 
for  1919  is  lacking. 

728.  Interpretation  of  the  statistics.  —  Statistics  of  com- 
merce in  the  war  period  are  necessarily  inaccurate,  and  two 
points  particularly  should,  be  borne  in  mind  in  analyzing  these 
figures.  (1)  The  statistics  omitted  an  immense  trade  in  govern- 
ment-owned goods;  figures  of  the  actual  movement  of  mer- 
chandise should  be  much  larger  to  give  an  accurate  idea  of 
the  facts.  The  correction  would  apply  particularly  to  the 

607 


608 


A   HISTORY  OF  COMMERCE 


earlier  years  of  the  war,  and  would  affect  imports  more  than 
exports.* 

(2)  Prices  were  rising  rapidly,  with  the  inflation  of  the  cur- 
rency; in  1919  they  were  about  two-and-one-half-fold  the  prices 
of  1913.  The  correction  to  be  applied,  to  ascertain  the  physical 
volume  of  trade,  would  affect  both  imports  and  exports. 

Clearly  the  trade  of  the  United  Kingdom,  if  measured  not 
in  paper  values  or  in  gold  values  but  in  quantities  of  physical 
goods,  declined  during  the  war.  The  shrinkage  was  most 
marked  in  re-exports,  of  foreign  and  colonial  merchandise. 
The  English  had  to  renounce  most  of  the  business  that  they  had 
been  used  to  transact  as  middlemen,  distributing  through  the 

*  In  July,  1917,  and  thereafter  the  accounts  included  merchandise 
imported  and  exported  in  public  as  well  as  private  ownership,  except  ex- 
ports for  the  use  of  British  troops  in  the  field.  Before  July,  1917,  the 
figures  of  exports  included  property  of  the  allied  governments,  but  omitted 
a  large  part  of  that  of  the  British  government;  figures  of  imports  omitted 
property  both  of  the  British  and  of  allied  governments,  except  that  they 
included  all  articles  of  food.  Some  idea  of  the  divergence  of  the  figures 
from  the  facts  may  be  got  by  comparing  the  American  statistics  of  exports 
from  the  United  States  to  the  United  Kingdom  with  British  statistics 
for  the  same  calendar  year  of  imports  from  the  United  States. 


American   figures 

$  millions 

British    figures 
£  millions 

1913  

591 

142 

1914  

600 

139 

1915  

1  198 

238 

1916  

1,887 

292 

1917  

2,009 

376 

1918  

2061 

515 

1919  

2,279 

542 

Normally  the  British  figures  of  imports,  c.i.f.,  would  exceed  the  Amer- 
ican figures  of  exports,  f.o.b.,  as  they  did  in  1913.  The  divergence  in 
the  opposite  direction  of  the  two  sets  of  figures  in  following  years  is  suffi- 
ciently striking  even  if  the  pound  sterling  is  rated  at  $5. 


THE   UNITED  KINGDOM,   1914-1920  609 

world  the  goods  of  other  countries.  The  values  of  domestic 
exports  also  declined  at  the  beginning  of  the  war,  and  though 
they  returned  later  to  about  their  former  level,  the  volume  of 
actual  wares  must  have  shrunk  seriously,  to  half  or  less.  Only 
in  the  case  of  imports  do  we  find  a  rise  in  value  that  keeps  pace 
with  the  rise  in  prices,  and  indicates  a  flow  of  goods  that  per- 
sisted and  perhaps  increased  in  amount.  These  results  are 
what  we  should  anticipate.  "Business  as  usual"  is  a  motto 
favored  by  the  private  merchant,  but  one  which  spells  ruin 
for  a  people  engaged  in  war.  To  make  war  effectively  they  must 
abandon  their  usual  employments,  turn  away  their  regular 
customers,  seek  from  outsiders  only  the  things  that  offer  a 
military  advantage,  but  seek  all  that  they  can  get  of  those 
things. 

729.  Problem  of  acquiring  and  of  paying  for  the  imports. 
—  The  most  serious  problem  for  England  was  to  get  the  goods 
across  a  sea  infested  by  submarines,  in  ships  that  had  con- 
stantly to  be  renewed,  through  terminals  choked  by  an  ex- 
traordinary congestion  of  traffic.    This  was  the  vital  problem, 
which  strained  the  energies  both  of  the  military  and  industrial 
forces  of   the  country,   but  which  by  their  cooperation  was 
solved.    A  problem  of  secondary  importance  at  the  time,  but 
important  always,  was  that  of  paying  for  the  goods. 

England  had  long  been  used  to  import  goods  in  excess  of 
those  exported.  The  figures  for  1913,  £134  million  excess  value 
of  imports  over  exports,  may  be  taken  as  a  normal  measure 
of  conditions  in  the  recent  period  of  peace.  Let  the  reader, 
however,  glance  down  the  column  giving  the  excess  of  imports 
in  the  years  following,  amounting  1914-1918  to  more  than 
£2,000  million,  and  he  will  appreciate  the  magnitude  of  the 
problem  involved. 

730.  Details  of  the  method  of  payment.  —  One  mode  of 
payment  is  indicated  in  the  table,  in  the  column  of  gold  ship- 
ments. £200  million  of  gold  were  exported  (in  excess  of  imports) 
in  the  three  years  1915-1917.     The  fact  that  in  the  year  1914 
and  particularly  in  1918  England  was  able  to  add  to  the  govern- 


610  A   HISTORY  OF   COMMERCE 

merit's  gold  reserve  is  striking  evidence  of  the  country's  finan- 
cial strength.  The  net  excess  of  gold  exported,  1914-1918, 
amounted  only  to  about  £120  million,  and  went  but  a  little 
way  toward  payment  for  the  excess  of  merchandise  imported. 
Reference  to  an  earlier  chapter  (section  448)  will  indicate 
other  resources  which  the  country  had  at  its  disposal.  British 
ships  which  carried  freight  for  foreigners  during  the  war  re- 
ceived extraordinarily  high  rates,  but  many  ships  were  pressed 
into  government  service,  many  were  lost,  and  considerable 
sums  had  to  be  paid  to  neutral  carriers.  Net  earnings  on  ship- 
ping could  hardly  have  maintained  the  level  of  the  period  before 
the  war,  although  in  one  estimate  they  are  credited  with  a 
contribution,  1914-1918,  of  £600  million.  A  more  considerable 
resource,  ideal  as  a  "liquid"  asset  and  adequate  in  amount 
to  more  than  any  demand  that  was  made  upon  it,  lay  in  the 
vast  investments  that  England  had  made  in  other  countries. 
The  sum  of  these  investments  is  estimated  to  have  amounted 
in  1914  to  £4,000  million  —  twice  the  total  adverse  balance  of 
merchandise  imports.  If  they  had  been  kept  intact  the  annual 
returns  from  them  in  the  five  years  1914-1918  would  have 
amounted  to  nearly  half  of  the  bill  to  be  met.  Actually  they 
were  "mobilized  "  by  the  government  early  in  the  war,  by  an 
arrangement  under  which  the  holders  exchanged  them  for 
government  bonds;  they  were  then  used  as  collateral  for  loans 
abroad  or  were  sold  outright.  Estimates  of  the  amount  of 
foreign  investments  thus  sold  vary  from  £500  to  £1,000  mil- 
lion. Finally  the  government  borrowed  abroad  over  £1,000 
million;  that  is,  it  paid  the  foreigner  for  the  merchandise  which 
he  had  shipped  by  getting  another  foreigner  to  advance  the 
money  to  him. 

The  figures  given  above  are  in  most  cases  rough  estimates, 
but  even  at  the  minimum  they  amount  to  a  total  considerably 
above  the  £2,000  million  which  was  suggested  as  the  sum  re- 
quired. In  fact,  England  was  herself  lending  large  amounts 
abroad  in  the  very  period  in  which  she  was  herself  borrowing. 
She  found  it  necessary  to  support  some  of  her  dominions  and 


THE   UNITED  KINGDOM,   1914-1920  611 

allies  by  loans  which  amounted  altogether  to  about  £1,800 
million.* 

731.  Character  of  exports  and  imports.  —  In  general  char- 
acter the  trade  of  the  United  Kingdom  remained  unchanged 
through  the  war.  Four-fifths  of  the  exports,  roughly,  continued 
to  be  articles  wholly  or  mainly  manufactured;  coal  was  the 
all-important  item  among  the  raw  materials.  On  the  other 
side  of  the  account  three-quarters  of  the  imports  continued  to 
consist  of  food-stuffs,  raw  materials  and  articles  mainly  un- 
manufactured. On  both  sides  of  the  account,  however,  there 
were  great  changes  in  the  relative  standing  of  the  items  in 
detail,  to  accord  with  the  shifts  in  demand  occasioned  by  the 
war.  The  exports  of  textiles  were  fairly  well  maintained; 
they  were  largely  produced  by  women,  and  the  factories  were 
not  adapted  to  serve  other  military  needs.  The  exports  of 
iron  and  steel  and  their  products  to  all  countries  except  France 
declined  sharply.  The  production  of  iron  remained  nearly 
constant,  and  the  production  of  steel  increased  by  one-half, 
but  the  metal  was  urgently  needed  for  military  purposes,  the 
shops  that  worked  it  up  were  turned  into  military  establish- 
ments, and  their  products  were  in  large  part  withdrawn  from 
general  trade.  In  recent  years  before  the  war  the  United 
Kingdom  had  exported  every  year  nearly  5  million  tons  of 
iron  and  steel  and  manufactures  thereof.  The  quantity  fell 
in  1914  to  below  4,  in  1915-1916  to  about  3,  in  1917-1918  to 
about  2.  The  metal  was  still  leaving  the  country  in  this  period, 
but  it  was  destined  to  a  more  grim  purpose  than  money- 

*  War  loans  on  the  books  of  the  British  government  stood  as  follows, 
1920,  (figures  in  million  pounds  sterling) : 

To  dominions  and  colonies 120 

To  France 515 

To  Russia 568 

To  Italy 457 

To  Belgium 99 

To  other  allied  governments 85 

1,844 


612 


A   HISTORY  OF  COMMERCE 


making,  and  was  not  recorded  in  the  statistics.  Among  the 
imports  those  items  showed  the  most  marked  increase  which 
served  the  primary  needs  of  subsistence  (rice,  wheat  flour, 
bacon  and  hams,  cheese,  milk,  cocoa,  etc.),  or  were  directly 
available  for  military  use  (fuel  oil,  gasoline,  copper,  arms  and 
ammunition,  chemicals,  etc.). 

732.  Sources  of  imports.  —  The  war  entailed  changes  even 
more  sweeping  in  the  direction  of  English  trade  than  in  the 
items  composing  it.  Among  the  countries  of  the  world  Germany 
had  an  importance  second  only  to  that  of  the  United  States 
as  a  source  of  imports  into  the  United  Kingdom.  If  to  Germany 
be  added  the  other  Central  Powers,  and  Belgium,  of  which  all 
but  a  small  fragment  was  soon  occupied,  a  territory  was  cut 
out  which  in  1913  had  furnished  over  one-sixth  of  the  imports 
for  consumption  in  the  United  Kingdom.  The  following  table 
indicates  how  these  losses  were  made  good,  and  where  the 
additional  supplies  were  procured  which  the  war  demanded. 

PERCENTAGE  OF  VALUE  OF  IMPORTS  FOR  CONSUMPTION 


1913 

1914 

1915 

1916 

1917 

1918 

1919 

From  British  Possessions  

20 

23 

28 

29 

32 

32 

34 

From  United  States     

20 

21 

30 

33 

37 

40 

35 

From  all  other    

60 

56 

42 

38 

31 

28 

31 

The  extent  to  which  England  satisfied  her  needs,  within  the 
Empire  is  the  more  remarkable  because  of  the  distance  of  some 
of  the  most  important  possessions,  which  put  an  additional 
strain  on  shipping  that  already  had  to  do  double  duty.* 
Most  striking,  however,  of  any  feature  of  the  table,  is  the 
position  of  extraordinary  importance  it  gives  to  the  United 
States,  to  be  explained  by  the  fact  that  this  country  was  rel- 

*  In  1915  Egypt  was  changed  in  the  British  classification  from  the  posi- 
tion of  foreign  country  to  that  of  British  Possession.  Imports  from 
Egypt  were  in  1913  £16,000,000  and  increased  rapidly  toward  the  end  of 
the  war,  to  £5,000,000  in  1918. 


THE   UNITED  KINGDOM,   1914-1920 


613 


atively  near,  was  blessed  with  an  abundance  of  the  commodities 
required,  and  was  inclined  to  the  Entente  even  before  it  entered 
the  war.  In  the  years  1917  and  1918  the  United  States  is 
credited  with  having  "furnished  from  50  to  95  per  cent  of  the 
United  Kingdom's  total  imports  of  wheat,  wheat  flour,  corn, 
oats,  barley,  bacon,  hams,  glucose,  kerosene,  motor  spirits, 
lubricating  oil,  fuel  oil,  pig  iron  and  crude  steel,  raw  copper, 
spelter,  raw  cotton,  tobacco,  etc." 

733.  Markets  for  exports.  —  In  times  of  peace  a  country 
is  in  general  more  interested  in  markets  for  its  exports  than  in 
sources  from  which  to  supply  its  imports.  The  condition  is 
reversed  in  time  of  war,  for  reasons  that  have  already  been 
suggested.  The  Central  Powers  and  Belgium  took  13  per 
cent  of  the  exports  of  the  United  Kingdom  in  1913,  but  the 
closing  of  this  market  was  of  relatively  slight  consequence  at 
the  time.  The  volume  of  British  products  available  for  export 
diminished  so  much  that  there  were  few  markets  to  which  the 
flow  of  goods  was  maintained.  Exports  even  to  the  United 
States  barely  held  their  own,  in  spite  of  the  phenomenal  in- 
crease of  imports  from  this  country. 

One  country,  France,  was  an  outstanding  exception  to  the 
general  rule.  The  United  Kingdom  had  been  used  to  import 
from  that  country  more  in  value  than  it  exported  thither. 
The  war  effected  an  abrupt  reversal  of  the  situation;  imports 
from  France  declined,  exports  thither  increased  enormously. 

SPECIAL  TRADE  OF  UNITED  KINGDOM  WITH  FRANCE,  1913-1919. 


1913 

1914 

1915 

1916 

1917 

1918 

1919 

Imports  into  UK     £  million    

41 

33 

27 

22 

20 

32 

44 

Exports  from  UK    £  million  

29 

?,6 

70 

93 

112 

131 

147 

Per  cent  total  exports  from  U.K  

5 

6 

18 

18 

21 

26 

18 

The  interpretation  of  these  changes  is  simple.    France  was 
the  battlefield  on  the  western  front.    British  exports  thither 


A   HISTORY  OF  COMMERCE 

•were  either  supplies  for  the  front,  or  were  destined  to  relieve 
Prench  labor  and  products  for  military  service.*  Toward 
the  end  of  the  war  France  was  taking  about  two-thirds  of  the 
total  British  export  of  iron  and  steel  manufactures. 

By  a  concentration  of  resources  and  energies  such  as  pictured 
here  the  war  was  won.  Meanwhile,  however,  England  was  neg- 
lecting her  old  customers  in  various  parts  of  the  world,  both 
in  the  British  Possessions  and  foreign  countries.  The  countries 
.of  South  America  were  forced  to  turn  to  the  United  States 
for  manufactures  which  had  formerly  reached  them  from  Ger- 
many or  England;  the  countries  of  the  Far  East  were  forced 
to  turn  to  Japan.  One  of  the  most  serious  of  the  problems  of 
the  period  following  the  war  was  to  England  the  recovery  of 
the  markets  which  she  had  had  to  sacrifice  in  the  stress  of  the 
conflict. 

734.  Effects  of  the  war  on  agriculture.  —  To  follow  out 
the  influence  of  the  World  War  on  the  internal  organization 
of  the  countries  engaged  is  beyond  the  scope  of  this  book.  A 
revolution  in  commerce  such  as  that  described  in  the  last  few 
pages  reflected,  of  course,  a  corresponding  change  in  internal 
conditions.  The  war  dissolved  old  traditions  and  loosed  new 
forces;  the  countries  engaged  in  it  will  never  be  again  what 
they  were  before  1914.  There  is  space  here  only  to  sketch  briefly 
a  few  of  the  changes. 

The  imperative  demand  for  food,  when  incoming  cargoes 
were  constantly  being  sunk  before  they  reached  port,  put  on 
British  agriculture  a  strain  which  was  felt  more  keenly  because 
of  the  large  proportion  of  agricultural  laborers  drawn  into 
military  service.  One  result  which  promised  to  have  a  lasting 
effect  was  the  introduction  of  improved  mechanical  equipment, 
particularly  the  modern  tractor.  The  heavy  taxes  on  the  owners 

*  These  figures  of  exports  omitted,  before  July,  1917,  most  British 
government  property,  and  even  after  that  date  government  supplies  for 
British  troops  in  the  field.  The  inclusion  of  these  items  would  make  even 
more  impressive  the  concentration  in  France  of  the  flow  of  goods  from 
England. 


THE   UNITED  KINGDOM,   1914-1920  615 

of  large  estates  forced  into  the  market  great  areas  of  land  which 
had  been  held  as  a  social  rather  than  an  economic  investment; 
and  laws  were  passed  designed  'to  put  agriculture  on  a  more 
businesslike  basis,  and  particularly  to  further  the  growth  of 
small  holdings.  So  deeply  rooted,  however,  are  the  traditions  of 
English  rural  life  that  it  would  be  hazardous  to  predict  the 
issue  of  these  changes. 

735.  Effects  on  industrial  organization.  —  In  the  more 
important  field  of  manufacturing  industry  the  changes  were 
likewise  sweeping  and  the  permanence  of  their  effect  appears 
to  be  more  certain.  Government  control  was  general  and 
despotic.  It  was  heavy-handed,  and  was  often  ineffective. 
It  was  attended  by  much  friction  and  waste.  It  did  at  least 
accumulate  and  disseminate  the  best  technical  information 
and  it  was  ruthless  in  scrapping  antiquated  equipment.  It 
stimulated  original  and  constructive  thought,  if  only  by  reaction 
against  its  own  arbitrary  rules.  When  manufacturers  escaped 
from  it  at  the  close  of  the  war  they  had  already  learned 
much  about  their  business  that  was  new  and  valuable  to 
them,  and  were  in  the  way  of  learning  more  by  their  own 
initiative. 

The  English,  like  other  peoples,  had  depended  very  largely 
on  Germany  for  synthetic  dyes;  that  is,  those  dyes  which  are 
manufactured  in  the  laboratory  by  chemical  process 3s,  and 
which  have  driven  most  of  the  natural  coloring  matters  from 
the  field  of  industry.  After  the  outbreak  of  the  war  they 
suffered  for  this  dependence  on  two  accounts;  first  in  their 
textile  industry  by  the  lack  of  dyes  of  good  quality  and  of  the 
requisite  variety,  second  in  the  field  of  military  operations  by 
the  superiority  of  the  Germans  in  the  manufacture  of  explosives, 
to  which  the  plant  of  dye  factories  is  well  adapted.  Early  in 
the  war,  therefore,  in  1915,  "British  Dyes,  Limited"  was  formed 
with  the  encouragement  and  financial  support  of  the  govern- 
ment. This  was  a  combination  of  manufacturers  using  dyes, 
designed  to  organize  the  production  of  synthetic  dye-stuffs 
by  the  most  advanced  methods  and  with  a  liberal  provision  for 


616  A   HISTORY  OF  COMMERCE 

scientific  research.  This  company  did  not  drive  from  the  field 
individual  producers,  who  actually  made  great  progress  during 
the  war.  It  is  significant,  however,  of  a  tendency  toward  com- 
bination, which  had  been  less  marked  in  England  than  in  Ger- 
many or  in  the  United  States,  and  which  had  hampered  the 
English  in  competition  with  their  rivals.  Government  control 
during  the  war  greatly  facilitated  the  movement,  which  ap- 
peared in  other  industries  and  promised  to  break  down  the 
separatism  of  the  old-fashioned  English  manufacturers. 

736.  Effects  on  mercantile  and  financial  organization.  —  In 
the  broader  fields  of  marketing  and  finance  the  English  took 
stock  of  their  deficiencies  and  set  to  work  to  remedy  them. 
There  was  a  noteworthy  movement  toward  amalgamation  in 
the  banking  business,  reducing  the  number  of  competing  units 
and  making  more  effective  the  resulting  institutions.  Partic- 
ularly significant  was  the  organization  under  royal  charter 
of  the  British  Trade  Corporation,  with  an  Authorized  capital 
of  £10  million.  This  company  was  actually  a  bank,  much  like 
the  great  German  banks  of  the  period  before  the  war,  but  it 
was  not  officially  so  styled,  because  it  was  meant  to  offer 
services  which  had  not  been  characteristic  of  conservative 
English  banking. 

"It  will  not  endeavour  to  compete  with  the  business  of 
existing  British  banks  and  merchants,  and  it  will  not  accept 
deposits  at  call  or  short  notice,  except  from  parties  who  are 
proposing  to  make  use  of  its  overseas  facilities.  Its  aim  will 
be  to  assist  with  the  co-operation  of  banks  and  other  institu- 
tions the  inception  of  new  undertakings,  and  for  this  purpose 
it  will  promote  the  formation  of  syndicates  and  the  placing  of 
issues.  When  British  capital  is  raised  by  its  means  for  over- 
seas enterprises,  it  will  seek  to  secure  that  orders  in  connection 
with  new  undertakings  are  placed  in  this  country.  It  will 
pay  special  attention  to  the  study  of  new  schemes,  and  for  this 
purpose  it  will  develop  an  Information  Bureau  with  representa- 
tives abroad  which  will  keep  in  touch  with  the  Department  of 
Commercial  Intelligence  of  the  Board  of  Trade.  It  will  also 


THE   UNITED  KINGDOM,   1914-1920  617 

be  ready  to  give  financial  assistance  to  arrangements  for  pro- 
moting the  better  organisation  of  British  industries." 

737.  Effects  on  labor.  —  In  the  world  of  labor,  as  in  the 
sphere  of  leaders,  the  war  wrought  far-reaching  changes.  The 
sudden  demand  for  men  in  the  field  necessitated  the  withdrawal 
of  laborers  from  industry  at  the  very  time  when  the  demand  for 
service  at  home  to  support  the  military  establishment  was 
most  urgent.  There  followed  a  strain  on  the  forces  of  labor 
which  in  some  cases  was  allowed  to  over-tax  the  capacity  of  the 
worker,  not  only  to  his  own  personal  injury  but  also  to  the 
disadvantage  of  the  public;  while  in  some  cases  the  laborer, 
not  properly  educated  in  patriotism  and  thrift,  exploited  the 
situation  to  extort  high  wages  which  he  spent  extravagantly. 
In  the  course  of  time  these  extremes  were  evened  out,  but  they 
illustrate  the  stresses  which  permeated  the  whole  industrial 
structure  and  which  persisted  in  one  form  or  another  until 
the  end  of  the  war.  There  was  necessarily  a  great  "dilution  " 
of  skilled  labor,  with  the  labor  of  women  and  of  unskilled  men 
and  youths.  Trade  unions  for  a  time  renounced  the  strict 
application  of  their  rules,  while  at  the  same  time  they  extended 
greatly  their  membership.  Conflict  with  employers  was  post- 
poned, in  general,  during  the  course  of  the  war.  But  the  feeling 
grew  strong  in  the  ranks  of  labor  that  an  undue  share  of  the 
burden  was  thrown  upon  the  worker,  and  that  the  capitalist- 
employer  had  an  undue  share  of  the  returns  and  too  nearly 
absolute  control.  The  Russian  revolution  appears  to  have  had 
only  a  very  slight  influence  on  the  spread  of  these  doctrines, 
which  can  fairly  be  considered  the  natural  product  of  war  con- 
ditions in  an  industrial  democracy.  With  the  close  of  the  war 
a  number  of  labor  conflicts  came  to  a  head,  and  one  in  coal- 
mining which  was  long  continued,  had  a  particularly  serious 
effect  upon  industry  in  general. 

738.  Control  of  commerce  and  commercial  policy.  —  Early 
in  the  war  the  trade  of  the  United  Kingdom  was  placed  by  the 
government  under  strict  control.  In  the  emergency  of  the  war 
it  was  obviously  proper  to  assure  the  priority  of  national  over 


618  A   HISTORY  OF  COMMERCE 

private  interests,  and  the  shortage  of  ships  made  regulation 
doubly  important.  The  importation  of  some  wares  was  pro- 
hibited outright,  of  some  wares  was  restricted  to  a  definite 
quantity,  of  some  wares  was  allowed  under  government  license. 
Similarly  exports  were  placed  under  control,  to  keep  the  needed 
stocks  at  home,  and  to  make  sure  that  enemy  powers  did  not 
profit  by  British  trade.  All  these  measures  had  a  military 
object,  and  had  no  significance  with  regard  to  the  traditional 
policy  of  free  trade.  In  the  second  war  budget,  however,  taking 
effect  in  1915,  the  list  of  dutiable  imports  was  extended  to 
include  some  manufactured  wares  (cinema  films,  clocks  and 
watches,  motor  cars,  and  musical  instruments),  which  were 
subjected  in  general  to  an  import  duty  of  33^  %.  The  measure 
was  designed  to  give  revenue,  not  protection,  and  it  had  little 
practical  importance;  the  importation  of  most  of  these  articles 
was  soon  absolutely  prohibited.  As  a  departure  from  the  prin- 
ciples that  had  been  followed  in  the  preceding  half  century  it 
had  considerable  significance.  Significance  attached  also  to  the 
arrangement  in  a  later  budget  by  which  preferential  rates, 
usually  two-thirds  or  five-sixths  of  the  full  rate,  were  established 
on  most  of  the  articles  subject  to  duty,  and  an  opportunity 
was  thus  afforded  to  make  some  return  to  the  British  dominions 
for  the  preferences  which  they  had  long  allowed. 

739.  Report  of  the  Committee  on  Commercial  Policy. — 
An  Economic  Conference  of  the  Allies  was  held  at  Paris  in 
1916,  at  which  was  discussed  the  commercial  policy  to  be 
pursued  by  the  allied  powers  at  the  close  of  the  war.  The  con- 
ference was  probably  designed  to  frighten  the  Germans  into* 
making  peace,  and  had  no  practical  results  of  importance. 
It  did,  however,  bring  to  the  attention  of  the  English  the 
questions  of  policy  which  they  must  face,  and  occasioned  the 
appointment  of  a  Committee  on  Commercial  and  Industrial 
Policy  after  the  War,  including  a  number  of  prominent  and 
influential  members,  which  made  its  final  report  in  1918.  The 
substance  of  the  report  was  as  follows. 

The  committee  condemned  the  plan  of  establishing  a  com- 


THE   UNITED  KINGDOM,   1914-1920  619- 

prehensive  tariff  to  be  used  in  bargaining  with  other  countries, 
to  force  concessions  in  rates  from  them;  and  also  the  plan  to- 
impose  duties  on  manufactured  imports  as  a  source  of  revenue. 
On  the  other  hand  it  favored  duties  in  specific  instances  to 
prevent  "dumping,"  the  sale  of  goods  in  a  foreign  market  at 
prices  lower  than  in  the  country  of  manufacture;  and  it  urged, 
in  the  light  of  experience  of  the  war  that  protection  should 
be  afforded,  "at  all  hazards  and  at  any  expense,"  to  industries, 
which  it  described  as  "key"  or  "pivotal."  Such  were  the 
industries  providing  synthetic  dyes,  zinc,  tungsten  (for  high- 
speed steel),  magnetos,  optical  and  chemical  glass,  hosiery 
needles,  precision  gages,  and  certain  drugs  and  chemicals. 
The  United  Kingdom  had  depended  on  other  countries,  par- 
ticularly Germany,  for  the  supply  of  these  products,  and  had 
then  paid  dearly  for  the  lack  of  them.  Finally,  the  Committee 
approved  the  principle  of  imperial  preference,  and  advised  that 
preferential  treatment  be  accorded  to  the  British  Possessions 
in  the  case  of  all  customs  duties  established. 

740.  Safeguarding  of  Industries  Act,  1921.  —  By  an  act  of 
Parliament  which  went  into  effect  in  1921  the  most  important 
recommendations  of  the  committee  were  given  the  force  of 
law.  The  act  imposed  an  import  duty  of  33|  %  ad  valorem  on  a 
long  list  of  articles,  perhaps  3,000  altogether,  defined  in  detail 
by  the  government  Board  of  Trade.  The  general  character 
of  these  articles  has  been  already  indicated  in  the  preceding 
section;  they  were  the  products  of  "key  industries,"  without 
which  other  and  larger  branches  of  industry  would  be  lamed  in 
operation.  Another  section  of  the  act  was  designed  to  prevent 
"dumping."  It  empowered  the  Board  of  Trade  to  protect  in- 
dustries in  the  United  Kingdom  by  a  duty  of  33  f  %  from  the 
competition  of  articles  offered  for  sale  there  at  prices  below 
the  cost  of  production  in  the  country  of  origin,  or  at  prices 
abnormally  low  by  reason  of  the  depreciation  of  the  currency 
in  that  country. 


620  A   HISTORY  OF  COMMERCE 

QUESTIONS   AND  TOPICS 

1.  Chart  the  statistics  of  British  trade,   1913-1919,    continuing  if 
practicable  the  graph  previously  constructed. 

2.  Immediate  effects  of  the  war  on  the  course  of  British  trade.    [Brit- 
ish oversea  commerce  in  war  time,  Quarterly  Rev.,  Jan.  1915,  223:   252- 
265;   Trade  in  war  time,  Polit.  Quarterly,  1916,  no.  7,  99-121.] 

3.  The  balance  of  trade  in  1916.     £H.  J.  Jennings  in  Fortnightly 
Rev.,  1917,  107:   302-312.] 

4.  In  what  way  did  each  of  the  imports  in  the  list  of  those  supplied 
by  the  United  States  contribute  to  maintain  military  efficiency? 

5.  Effects  of  the  war  on  agriculture.     [J.  B.  Firth  in  Fortnightly 
Rev.,  1917,  107:    595-605;    A.  W.  Ashby,  in  Edinburgh  Review,  1917, 
225:  343-363;   H.  Wyatt,  Development  of  the  agricultural  motor,  Quar- 
terly Rev.,  1917,  227:    194  ff.] 

6.  Agricultural  policy.    [L.  Smith  Gordon  in  Quarterly  Rev.,  1917, 
227:   178 ff.;    F.  D.  Acland  in  Contemp.  Rev.,  May,  1917,  HI:  570-578; 
E.  Lipson  in  Fortn.  Rev.,  1917,  107:    100  ff.] 

7.  Industrial  efficiency  in  the  war.    [A.  Shadwell  in  Edinb.  Rev.,  Jan. 

1915,  221 : 151-177;  B.  S.  Rowntree,  Nineteenth  Cent.,  1917,  81: 399-412.] 

8.  The  British  Trade  Corporation.    [H.  J.  Jennings  in  Fortn.  Rev., 

1916,  106:   841-851;   R.  H.  I.  Palgrave  in  Quart.  Rev.,  Jan.,  1918,  229: 
143-153;  C.  S.  Addis  in  Edinb.  Rev.,  July,  1918,  228:  43-58.] 

9.  The  labor  movement  during  the  war.    [G.  D.  H.  Cole  in  Amer. 
Econ.  Rev.,  Sept.,  1918,  8:   485-505;   J.  A.  Hobson  in  Contemp.  Rev., 
Nov.,  1920,  118:  638-645;  R.  S.  Rowntree  in  Contemp.  Rev.,  Oct.,  1917, 
112:    368-379.] 

10.  Railroads  in  and  after  the  war.    [E.  A.  Pratt  in  Nineteenth  Cent., 
1916,  80:    398-410;    J.  H.  Balfour-Browne  in  Nineteenth  Cent.,.  1918, 
83:  619-636;  Edinb.  Rev.,  Jan.,  1917,  225:   84-103;   W.  M.  Acworth  in 
National  Rev.,  1919-20,  74:   256  ff.] 

11.  Shipping  at  the  close  of  the  war.     [J.  Hilton  in  Edinb.  Rev., 
Apr.  1918,  227:    359-382;    S.  Brooks  in  Nineteenth  Century,  1918,  84: 
1116-1129;    C.   Maughan  in  Quart.   Rev.,   Oct.,   1919,  232:    471-488; 
A.  Hurd  in  Fortn.  Rev.,  1920,  113:  584-597.] 

12.  Proposals  of  the  Paris  Conference  of  1916,  regarding  trade  policy 
after  the  war.    [H.  Cox  in  Edinb.  Rev.,  July,  1916,  224:  189-208;  J.  A.  R. 
Marriott  in  Nineteenth  Century,  1916,  80:    1097-1112.] 

13.  Report  of  the  Committee  on  Commercial  Policy.     [Beauchamp 
in  Contemp.  Rev.,  May,  1917,  111:   545-552;   L.  J.  Reid  in  same,  July, 
1918,  114:   35-40.] 

14.  Tariff  policy  at  the  close  of  the  war.    [H.  Cox  in  Edinb.  Rev., 
Apr.  1917,  225:   379-408,  and  Oct.,  1918,  228:   387  ff.,  with  many  refer- 
ences to  contemporary  opinion.] 


THE   UNITED  KINGDOM,   1914-1920  621 

BIBLIOGRAPHY 

Most  of  the  statistical  facts  of  primary  commercial  importance  are 
to  be  found  in  the  annual  volumes  of  the  Statistical  Abstract  of  the  United 
Kingdom.  A  useful  compilation  is  offered  by  William  A.  Paton,  The 
economic  position  of  the  United  Kingdom,  1912-1918,  Washington,  1919, 
Bur.  of  For.  and  Dom.  Commerce,  Misc.  Series  no.  96. 

Of  the  publications  of  the  Carnegie  Peace  Endowment  the  following 
pay  special  attention  to  the  United  Kingdom:  vol.  11,  B.  H.  Hibbard, 
Effects  upon  agriculture;  vol.  18,  C.  W.  Baker,  Government  control  and 
operation  of  industry;  vol.  7,  F.  L.  McVey,  Financial  history;  vol.  4, 
F.  H.  Dixon  and  J.  H.  Parmelee,  War  administration  of  the  railways; 
vol.  14,  M.  B.  Hammond,  British  labor  conditions  and  legislation.  J.  A. 
Salter,  Allied  Shipping  Control,  Oxford,  1821,  is  the  first  of  a  British  series 
of  publications  of  the  Carnegie  Peace  Endowment  which  promises  to 
make  important  contributions  to  our  knowledge  of  the  war  period. 
Howard  L.  Gray,  Wrar  time  control  of  industry:  the  experience  of  Eng- 
land, N.  Y.,  1918,  is  accepted  by  competent  British  critics  as  an  excellent 
presentation  of  the  subject. 

The  British  Association  for  the  Advancement  of  Science  stimulated 
inquiries  into  "Labour,  finance  and  the  war,"  which  have  been  edited 
by  A.  W.  Kirkaldy  and  published  under  that  title. 

The  National  Civic  Federation  published  a  report  on  The  labor  sit- 
uation in  Great  Britain  and  France,  N.  Y.,  1919,  which  aimed  to  describe 
impartially  conditions  and  policies.  In  the  writings  of  G.  D.  H.  Cole 
(Labour  in  war  time,  London,  1915,  etc.,  etc.)  will  be  found  a  vigorous 
criticism  of  the  existing  system;  for  a  corrective  see  L.  L.  Price,  Mr.  Cole 
on  labour  problems,  Economic  Journal,  June,  1919,  29:  186-201.  Space 
is  lacking  here  for  reference  to  the  many  publications  on  Whitley  Councils, 
Gild  Socialism,  etc.,  and  to  the  various  aspects  of  "reconstruction."  A 
brief  report  entitled  Economic  reconstruction,  from  the  Bureau  of  For. 
and  Dom.  Commerce,  Misc.  Series  no.  73,  Washington,  1918,  attends  par- 
ticularly to  commerce  and  commercial  policy,  and  is  relatively  full  on  the 
United  Kingdom;  it  can  if  necessary  be  made  to  serve  as  a  substitute 
for  the  full  report  of  Lord  Balfour  of  Burleigh's  committee  on  commercial 
and  industrial  policy  [Cd.  9035],  which  was  published  in  the  parliamentary 
set  for  1918,  vol.  13,  with  an  extensive  report  on  shipping  and  other  reports 
on  special  industries. 


CHAPTER   LVI 

FRANCE  AND   THE  PROBLEM   OF  REPARATIONS 

741.  Effects  of  the  war  upon  the  commerce  of  belligerent 
and  of  neutral  states.  —  The  commerce  of  the  United  Kingdom 
in  the  period  of  the  war  has  been  treated  at  considerable  length 
not  only  because  it  was  itself  an  important  factor  in  deter- 
mining the  outcome  of  the  struggle,  but  also  because  it  illus- 
trated the  general  conditions  of  the  period.     War  brought  to 
the  other  belligerent  states  the  same  urgent  need  of  imports, 
affected  in  a  similar  way  the  organization  of  production,  and 
restricted  exports.     To  the  neutral   states  the  war  brought 
some  dangers  and  some  losses,  but  it  brought  also  a  great  com- 
mercial opportunity.    If  they  were  in  a  position  to  supply  the 
needs  of  the  belligerents  they  could  charge  unheard  of  sums 
for  their  services.    Individual  merchants  who  seized  the  oppor- 
tunity made  great  fortunes,  in  the  Netherlands,  in  the  Scandi- 
navian states  and  in  Spain.    In  neutral  as  well  as  in  belligerent 
states,  however,  the  waste  of  war  brought  loss  and  suffering; 
while  some  few  individuals  grew  richer  the  mass  of  the  people 
grew  poorer. 

742.  Statistics   of   French   commerce,   1913-1919.  —  The 
most  important  features  in  the  commerce  of  France  in  the 
period  of  the  war  appear  in  the  accompanying  table.    As  the 
table  does  not  take  into  account  the  depreciation  of  the  French 
currency  in  the  course  of  the  war  and  gives  merely  nominal 
exchange  equivalents,  the  reader  should  be  cautious  in  the  com- 
parison of  figures  in  the  upper  and  lower  part  of  a  column,  and  in 
the  comparison  of  these  "paper"  figures  with  figures  represent- 
ing actual  gold  dollars,  as  given  in  the  statistics  of  the  United 

622 


FRANCE  AND   THE  PROBLEM  OF  REPARATIONS    623 

States.*     Figures  in  any  horizontal  row  are  strictly  comparable, 
since  they  represent  an  equal  amount  of  depreciation. 

TRADE  OP  FRANCE,  1913-1919. 

(Figures  in  hundred  millions  of  dollars;  1  signifies  approximately 
$100,000,000.  The  left-hand  column  under  every  heading  gives  imports; 
the  right  hand  column  gives  exports.) 


Food  products 

Material  for 
industry 

Manufactures 

Total  trade 

I. 

E. 

I. 

E. 

I. 

E. 

I. 

E. 

1913   

4 
4 
6 
8 
13 
10 
12 

2 
1 
1 
1 
1 
1 
1 

10 
7 
9 
13 
23 
18 
18 

4 
3 
1 
2 
2 
2 
3 

3 

2 
6 
9 
17 
12 
11 

7 
5 
5 

7 
8 
5 

7 

16 

12 
21 
29 
53 
40 
41 

13 
9 

8 
10 
12 
8 
12 

1914  

1915.  

1916  

1917  

1918  

1919  

743.  Changes  in  imports  and  exports.  —  Attending  first 
to  the  horizontal  row  giving  conditions  in  1913  we  find  France 
able  to  enjoy  a  surplus  of  imports  by  reason  of  her  foreign  in- 
vestments, in  Russia  and  other  countries;  the  imports  consisted 
mainly  of  industrial  raw  materials,  to  a  less  extent  of  food 
products,  still  less  of  manufactures.  The  country  made  pay- 
ment for  its  imports  mainly  by  finished  manufactures,  but 
exported  also  raw  materials  and  food  products.  Now  following 
down  the  vertical  columns  the  reader  will  note  an  absolute 
decline  of  the  value  of  exports,  even  in  terms  of  a  depreciated 
currency;  this  implied,  of  course,  a  much  more  serious  shrink- 

*  The  franc,  nominally  worth  $.193,  declined  rapidly  in  purchasing 
power  in  the  course  of  the  war,  but  was  kept  close  to  par  in  foreign  ex- 
change by  the  action  of  the  allied  governments  in  "pegging"  the  exchange. 
When  the  government  ceased  to  control  the  rate,  in  the  Spring  of  1919,  it 
fell  sharply;  it  was  below  $.10  in  Dec.,  1919,  was  below  $.06  in  Dec.  1920, 
and  then  made  a  recovery. 


624 


A   HISTORY  OF   COMMERCE 


age  in  the  quantities  of  wares  sold  abroad.  Accompanying  this 
movement  was  a  rapid  expansion  in  the  nominal  value  of  the 
imports,  sufficient  in  some  branches  to  indicate  an  actual 
increase  in  the  volume  of  trade,  and  resulting  in  a  divergence 
in  the  values  of  imports  and  exports  which  signified  that 
France  was  incurring  a  heavy  debt  abroad. 

744.  Changes  in  the  direction  of  trade.  —  From  Germany 
France  had  received  in  1913  about  13  per  cent  of  the  total 
value  of  her  imports,  from  Belgium  about  half  as  much;  so 
that  the  closing  of  those  two  countries  alone  involved  the  source 
of  one-fifth  of  the  French  import  trade.  Russia  had  not  been 
so  important  as  a  source  of  supply,  and  trade  with  the  Central 
Powers  aside  from  Germany  had  not  been  considerable.  The 
following  table  indicates  the  sources  to  which  France  turned 
to  obtain  the  means  for  carrying  on  the  war. 

IMPORTS  INTO  FRANCE,  BY  COUNTRY  FROM  WHICH  OBTAINED 

(Figures  in  hundred  millions  of  dollars;   .  1  signifies  approximately 
$10,000,000.) 


1913 

1914 

1915 

1916 

1917 

1918 

1919 

United  States  

2 

?, 

6 

q 

IP 

13 

11 

United  Kingdom  

2 

? 

6 

8 

13 

11 

10 

Spain      

5 

4 

1 

1 

3 

1 

1 

Italy  

5 

3 

1 

1 

2 

1 

1 

Argentine  

7 

4 

1 

1 

2 

2 

2 

Algiers  

6 

6 

1 

1 

1 

1 

1 

The  exports  of  France,  measured  even  in  the  inflated  value 
of  the  period,  declined  in  the  case  of  most  countries  of  com- 
mercial importance;  the  noteworthy  exception  was  Italy,  to 
which,  in  the  course  of  the  war,  exports  were  double  or  triple 
the  usual  value  of  the  preceding  period  of  peace. 

745.  French  finances  during  the  war.  —  French  finances 
were  in  bad  condition  at  the  outbreak  of  the  war.  Expenditures 


FRANCE  AND   THE  PROBLEM  OF  REPARATIONS    625 

had  increased  greatly  in  the  decade  before  1914,  and  the  govern- 
ment was  slow  to  recognize  the  necessity  of  heavier  taxes.  In 
the  years  1908-1914  every  year  but  one  had  shown  an  actual 
deficit.  After  mobilization,  which  even  in  August,  1914,  had 
called  out  nearly  4  million  men  and  early  in  1915  had  called 
over  5  million,  it  was  particularly  difficult  to  devise  and  apply 
new  taxes;  while  in  the  meantime  the  enemy  had  occupied 
some  of  the  richest  industrial  districts,  contributing  normally 
about  15  per  cent  of  the  public  revenue.  In  consequence  the 
government  raised  by  taxation  only  a  small  proportion  of  the 
funds  required  by  the  expenditures  of  the  war  period  (Aug.  1, 
1914  —  Apr.  1,  1919),  about  one-eighth,  as  compared  with  one- 
quarter  in  the  United  Kingdom  and  one-third  in  the  United 
States.  Stating  figures  approximately  in  milliards  of  francs  the 
government  incurred  a  total  expenditure  of  181,  and  met  it 
as  follows :  22  by  taxes,  86  by  loans  placed  at  home,  26  by  loans 
from  the  Bank  of  France,  27  by  foreign  loans,  leaving  a  float- 
ing debt  of  20  still  to  be  provided  for  in  1919.  The  last  three 
items  had  an  important  bearing  on  the  commercial  relations 
of  France.  Loans  from  the  Bank  of  France  took  the  form  of 
bank  notes,  paper  money,  which  inflated  the  currency  and 
tended  to  raise  the  rate  of  foreign  exchange  on  other  countries 
far  above  the  normal  par;  the  unsettled  finances  evidenced  by 
the  floating  debt  tended  to  cause  violent  fluctuations  of  the 
rate;  a  foreign  debt  would,  if  interest  were  paid  on  it,  involve 
remittance  at  high  rates  and  would  require  an  increase  of  ex- 
ports if  no  other  resource  were  available. 

746.  Damage  done  to  the  devastated  districts.  —  The 
amount  of  the  damage  done  to  property  in  that  part  of  France 
where  the  fighting  took  place  will  probably  never  be  known 
with  any  approach  to  accuracy.  The  area  affected  was  not  very 
large,  perhaps  10  per  cent  at  most  of  the  total  area  of  France, 
of  which  the  smaller  part,  perhaps  4  per  cent  of  the  total,  lay 
in  the  devastated  districts  where  the  fighting  was  fiercest. 
Unfortunately  for  France  her  best  coal  and  iron  mines  and 
almost  one-third  of  her  manufacturing  industry  lay  within  the 


626  A   HISTORY  OF  COMMERCE 

area  of  invasion;  from  one-half  to  nine-tenths  or  more  of 
some  of  the  textile  manufactures  (woolen,  cotton,  flax  and 
linen)  and  half  of  the  metal  workers,  were  in  the  occupied 
zone.  France  was  seriously  handicapped  during  the  war  by 
her  inability  to  draw  upon  the  resources  of  the  occupied  regions. 
Her  dependence  on  imports  from  the  United  States  and  the 
United  Kingdom  would  not  have  been  nearly  so  great  if  she 
had  been  able  to  maintain  her  productive  organization  un- 
impaired. She  suffered  from  the  lack  of  product,  but  in  spite 
of  that  she  and  her  allies  won  the  war.  Then  she  faced  a  greater 
loss,  that  of  plant,  the  accumulated  capital  of  generations, 
represented  not  only  in  mines  and  factories,  but  also  in  dwelling 
houses,  in  roads  and  bridges,  in  the  very  fields  themselves.  In 
the  devastated  districts  peace  restored  to  her  not  an  asset 
but  a  grievous  liability.  She  owed  to  her  own  people  the 
obligation  of  repairing  the  damage  and  restoring  that  which 
had  been  destroyed,  at  a  time  when  she  was  crippled  by 
other  burdens  which  the  war  had  cast  upon  her.  Conservative 
estimates  of  the  loss  ranged  from  10  to  15  milliards  of  gold 
francs;  other  estimates  (unquestionably  exaggerated  for 
political  purposes)  went  up  to  65  or  75  or  more. 

747.  Territorial  gains  of  France.  —  The  treaty  of  peace 
rendered  France  some  benefits  that  may  be  put  on  the  other 
side  of  the  account.  Most  important  to  her,  among  the  ter- 
ritorial changes,  was  the  restoration  of  the  provinces  of  Alsace 
and  Lorraine,  which  Germany  had  taken  and  had  held  since 
1871.  Lorraine  included  the  richest  bed  of  iron  ore  in  Europe; 
from  that  province  Germany  had  derived,  since  the  develop- 
ment of  the  basic  process  of  steel  manufacture,  three-fourths 
of  her  annual  supply  of  ore.  The  phosphate  slag,  which  was 
a  by-product  of  the  basic  process,  was  a  valuable  fertilizer; 
and  a  great  bed  of  potash  in  Alsace  offered  another  important 
agricultural  resource.  To  atone  to  some  extent  for  the  wanton 
damage  done  to  the  French  coal  mines,  which  could  not  be 
repaired  for  years,  Germany  ceded  ownership  in  the  coal  mines 
of  the  Saar  basin,  on  the  border  of  Lorraine,  which  did  not, 


FRANCE  AND   THE  PROBLEM  OF  REPARATIONS     627 

however,  become  a  part  of  France,  but  was  left  under  inter- 
national control.  These  changes  doubled  French  capacity  for 
iron  production.  They  left  her  still  short  of  coal,  particularly 
of  the  coking  variety  needed  for  blast  furnaces;  and  promised 
to  render  her  the  greatest  return  if  she  shipped  her  ore  to  the 
Ruhr  district  of  Germany  to  be  smelted. 

748.  The  question  of  reparation;  Germany's  quick  assets. 
—  Important  as  were  these  territorial  changes  for  the  future 
of  France  they  offered  little  help  in  her  present  emergency. 
She  needed  immediately  a  great  fund  of  fluid  wealth,  which 
could  be  used  to  repair  the  damage  done  to  her  by  the  war, 
and  felt  that  she  had  the  right  to  look  to  Germany,  the  de- 
liberate aggressor  in  the  conflict,  to  make  good  the  losses  which 
she  had  suffered. 

Reference  to  the  table  of  costs  of  the  war  in  a  preceding 
chapter  will  show  the  lamentable  inadequacy  of  German  re- 
sources to  make  good  the  total  losses  for  which  Germany  was 
responsible.  The  costs  could  have  been  met  only  in  small 
part  even  if  the  total  national  wealth  of  Germany  as  it  was 
before  the  war  could  have  been  expropriated.  Some  parts  of 
that  wealth,  indeed,  could  be  and  were  taken;  such  were 
securities  representing  German  investments  in  foreign  countries, 
and  ships,  which  could  be  moved  to  any  part  of  the  world  with- 
out losing  their  value.  In  the  aggregate  these  items  went  but 
a  little  way  toward  meeting  the  total  costs.  Another  item, 
the  stock  of  precious  metals  which  the  German  government 
had  accumulated  and  retained,  was  not  so  readily  available 
as  it  appeared  to  be;  on  that  stock  was  based  the  whole  struc- 
ture of  public  and  private  credit  in  Germany,  and  a  drain  upon 
it,  if  excessive,  would  cause  a  collapse  that  would  seriously 
affect  the  solvency  of  the  country.  Germany  was  in  such  des- 
perate straits  at  the  close  of  the  war  that  the  allies  of  the  Entente 
were  forced  to  allow  her  to  buy  food  from  the  outside  with  part 
of  the  gold  reserve,  and  saw  it  melting  away  before  their  eyes. 
In  sum,  the  "quick  assets  "  of  Germany  were  pitifully  small  to 
meet  the  bill  of  costs;  they  were  estimated  to  amount  to  several 


628  A  HISTORY  OF  COMMERCE 

milliard  dollars,  but  when  the  necessary  deductions  were  made 
they  offered  scarcely  one  milliard  for  reparations. 

749.  Principle  conditioning  Germany's  capacity  to  pay.  — 
Most  of  the  wealth  of  Germany  was  fixed  in  the  country, 
and  was  not  directly  available  for  reparation.    There  was  no 
sense  in  confiscating  and  distributing  it.      The  reader  will 
better  understand  that  essential  point  if  he  will  face  the  ques- 
tion:   how  could  the  benefits  arising  from  the  ownership  of 
that  wealth  be  transferred  to  other  countries  to  be  enjoyed  in 
them?     Suppose  that  you  are  granted,  to  repair  your  losses 
in  the  war,  the  ownership  of  a  German  farm  or  factory;   how 
will  you  get  any  good  from  it?    You  want  some  real  material 
good,    something   that   you   could   enjoy   yourself,    or   could 
exchange  to  advantage.     A  piece  of  paper  would  not  satisfy 
you.     Gold  would  be  acceptable,  but  the  Germans  had  little 
of  that  left,  needed  a  minimum  amount  to  enable  them  to 
continue  in  business,  and  could  get  more  only  as  they  bought 
it  abroad.     To  pay  you  something  real  the  Germans  would 
have  to  ship  out  something  real,  whether  they  paid  it  directly 
to  you  or  bought  with  it  "foreign  exchange,"  that  is,  the  right 
to  something  real,  gold  or  its  material  equivalent,  in  the  country 
in  which  you  live.    After  the  initial  payment  of  the  country's 
quick  assets,  Germany  could  pay  only  a  sum  equal  in  value  to 
the  excess  of  German  exports  over  imports  during  any  period  of 
time  that  might  be  determined.     This   was   the  fundamental 
principle  limiting  the  amount  of  payment  in  reparations  that 
could  effectively  be  imposed. 

750.  Practical  limits  of  amount  and  period  of  payments.  — 
There  were,  therefore,  two  factors  to  be  considered  in  fixing 
the  amount  to  be  exacted:  the  amount  per  year  that  Germany 
could  pay,  and  the  number  of  years  over  which  payments 
should  extend.     Trustworthy  investigators  reached  the  con- 
clusion that  Germany  before  the  war,  with  its  productive  organi- 
zation unimpaired,  would  have  been  able  to  pay  about  one  mil- 
liard dollars  a  year.     Here  was  given  the  maximum  for  one 
factor.   Various  considerations  set  a  limit  to  the  other  factor, 


FRANCE  AND   THE  PROBLEM  OF  REPARATIONS    629 

the  period  of  time  during  which  payments  should  be  exacted. 
On  this  as  on  other  points  there  was  no  general  agreement; 
the  situation  at  the  close  of  the  war  was  too  tense  to  permit 
participants  in  it  to  judge  the  question  calmly.  Fair-minded 
friends  of  the  western  allies  believed,  however,  that  the  interests 
of  the  allies  themselves  required  the  limitation  of  the  period 
during  which  the  payment  should  be  made  to  a  definite  and 
reasonably  short  time,  say  thirty  years,  the  span  of  a  human 
generation.  This  restriction  was  prompted  by  regard  to  justice, 
by  the  impropriety  of  visiting  on  future  generations  the  sins 
of  their  ancestors.  It  accorded  with  considerations  of  political 
expediency;  the  payment  of  reparations  was  certain  to  introduce 
an  element  of  strain  in  international  relations,  both  economic 
and  political,  which  must  not  be  too  long  continued.  Finally, 
and  practically  of  the  greatest  importance,  the  benefit  to  be 
derived  from  reparations  grew  rapidly  less  as  the  time  of  pay- 
ment was  extended.  The  reader  doubtless  knows  how  quickly 
sums  mount  up  when  they  are  put  at  compound  interest.  He 
should  realize  that  payments  to  be  made  in  the  future  shrink 
correspondingly  when  their  present  value  is  computed  by  a 
process  of  discount.  How  much  will  you  give  for  my  pledge 
to  pay  one  dollar  fifty  years  hence?  You  are  foolish  if  you 
offer  more  than  a  small  fraction  over  five  cents,  when  the  rate 
of  interest  is  6  %. 

With  due  regard  to  all  the  factors  in  the  settlement  sober 
and  competent  students  of  the  question  believed  that  the 
maximum  payment  which  should  be  imposed  on  Germany 
might  amount  to  a  lump  sum  in  present  value  of  ten  to  fifteen 
milliards  of  dollars. 

751.  Provisions  of  the  Treaty  of  Versailles  regarding 
reparations.  —  By  the  Treaty  of  Versailles  (article  231) 
Germany  accepted  "the  responsibility  of  Germany  and  her 
allies  for  causing  all  the  loss  and  damage  to  which  the  Allied 
and  Associated  Governments  and  their  nationals  have  been 
subjected  as  a  consequence  of  the  war  imposed  upon  them  by 
the  aggression  of  Germany  and  her  Allies."  The  treaty  itself 


630  A   HISTORY  OF  COMMERCE 

recognized  that  the  resources  of  Germany  were  not  sufficient 
for  complete  reparation,  but,  most  unfortunately,  did  not 
itself  fix  a  definite  sum,  the  maximum  which  Germany  might 
reasonably  be  expected  to  pay  with  reference  to  the  practical 
factors  which  have  been  sketched  in  the  preceding  section. 
Some  of  the  European  leaders  in  the  Entente  had  held  out 
extravagant  prospects  of  indemnity  to  their  people,  and  were 
unwilling  as  yet  to  confess  the  facts.  The  exact  terms  of  pay- 
ment were  therefore  left  to  be  settled  later  by  a  Reparations 
Commission  which  was  given  far-reaching  powers  to  get  the 
most  it  could  up  to  a  limit  set  so  high  that  it  manifestly  ex- 
ceeded German  capacity  to  pay.  Then  followed  a  period  of 
bitter  contest  in  which  the  Allies  by  threats,  by  fiscal  penalties, 
and  by  actual  occupation  of  German  territory  sought  to  make 
good  their  claims,  while  the  Germans  fell  behind  in  payment 
and  stolidly  professed  their  inability  to  meet  the  demands 
imposed  upon  them.  Recovery  and  reconstruction  were  seri- 
ously delayed,  both  in  western  and  in  central  Europe. 

752.  London  settlement  of  May,  1921.  —  A  substantial 
approach  toward  a  practicable  settlement  of  the  question 
of  reparations  was  made  in  conditions  drawn  up  in  London  in 
May,  1921,  and  imposed  on  Germany  under  threat  of  an  oc- 
cupation of  the  district  of  the  Ruhr.  The  terms  are  complicated, 
and  are  not  worth  a  detailed  description  for  they  will  probably 
be  amended,  but  they  are  of  interest  as  indicating  the  form  that 
the  final  settlement  may  possibly  take.  A  summary  of  the 
most  important  provisions  follows:  figures  are  stated  in 
milliards  of  gold  marks,  a  unit  roughly  equal  to  250  million 
dollars. 

Germany  was  bound  to  annual  payments  under  two  heads: 
first  a  fixed  sum  of  2  milliards,  second,  a  sum  equal  in  amount 
to  about  one  quarter  (26%)  of  the  value  of  German  exports 
for  the  year,  but  not  less  than  1  milliard.  On  the  basis  of  these 
annual  payments  of  a  minimum  of  3  milliard  the  allies  were  to 
issue  German  bonds  of  a  face  value  of  50  milliard,  on  which  5  % 
interest  could  be  paid  and  still  leave  available  half  a  mil- 


FRANCE  AND   THE  PROBLEM  OF  REPARATIONS    631 

Hard  a  year  to  be  employed  in  a  sinking  fund  toward  the  ex- 
tinction of  the  debt;  after  a  period  of  about  thirty-seven 
years  Germany  would  be  free.  The  allies  hoped  to  realize  the 
present  value  of  the  bonds  by  selling  them  to  investors,  and 
thus  get  ready  funds  for  economic  reconstruction;  while  they 
professed  to  believe  that  the  minimum  of  3  milliard  marks  a 
year  was  well  within  the  German  capacity  to  pay.  Germany 
before  the  war  had,  indeed,  an  export  trade  amounting  to  8 
milliard  marks  and  over,  while  this  arrangement  assumed 
only  about  4  milliard,  but  assumed  that  the  exports  could 
carry  the  burden  of  a  heavy  tax.  The  provision  for  the  variable 
payment  of  26%  of  the  exports  assured  the  allies  that  they 
would  share  in  Germany's  prosperity  if  it  actually  did  return; 
and  arrangements  were  made  for  the  possible  issue  of  more 
bonds  on  this  basis  up  to  the  amount  of  82  milliard,  making 
the  total  capital  sum  132  milliard  —  over  thirty  thousand 
million  dollars.  The  bonds  were  to  be  distributed  among 
the  allied  states  in  the  following  proportions:  France  52  per 
cent  of  the  issue,  United  Kingdom  22,  Italy  10,  Belgium  8, 
and  the  remainder  to  other  countries. 

753.  Objectionable  aspect  of  reparation  payments.  —  Atten- 
tion should  now  be  directed  to  an  interesting  and  important 
feature  of  the  reparation  question.  Germany,  as  has  been  said, 
could  pay  an  indemnity  only  by  a  surplus  of  exports  over  a 
long  period  of  years.  Likewise,  the  allies  in  the  long  run  could 
receive  an  indemnity  only  in  the  form  of  a  surplus  of  imports. 
Might  not  this  flow  of  goods,  forced  by  pressure  on  Germany, 
be  a  curse  rather  than  a  blessing  to  the  country  receiving  it; 
might  it  not  undermine  home  industries?  Or,  if  a  tariff  pro- 
tected the  producer  at  home  might  it  not  simply  divert  this 
flow  to  neutral  markets,  where  the  British  or  French  exporter 
would  find  himself  crowded  out  by  a  competition  that  was 
fierce  and  unyielding  because  of  the  military  pressure  behind 
it  —  the  military  pressure  of  his  own  home  government! 
If  Germany  endured  the  strain  would  she  not  at  the  end  of 
a  generation  rule  the  markets  of  the  world,  win  the  world  by 


632  A  HISTORY  OF  COMMERCE 

losing  the  war?  The  situation  sounds  so  paradoxical  that  it 
is  hard  to  realize  how  serious  is  its  import.  Only  by  a  surplus 
of  exports  could  Germany  pay.  What  form  could  these  exports 
take  which  would  not  injure  some  interests  in  the  allied 
countries? 

It  is  probable  that  considerations  of  this  kind  will  lead 
in  time  to  a  considerable  moderation  of  the  demands  imposed 
upon  Germany.  And  it  is  significant  that  even  in  1921  arrange- 
ments were  being  made  for  the  payment  in  kind,  by  the  delivery 
of  coal,  timber,  building  material  of  all  kinds,  of  a  consider- 
able fraction  of  the  sum  due  to  France. 


1.  Report  upon  one  of  the  neutral  states  during  the  war: 

(a)  Switzerland.    [Report  of  Bureau  of  For.  and  Dom.  Commerce,  Misc. 

series  no.  90.] 
(6)  Netherland.    [Same  series,  no.  91;  B.  Abraham,  in  Fortnightly  Rev., 

1917,  107:    443  ff.,  1918,  110:    110  ff.;    P.  Geyl  in  Contemp.  Rev., 

1918,  113:   228-294.] 

(c)  Scandinavia.    [E.  Bjorkman  in  American  World's  Work,  Feb.,  1918, 
35:  437-447.] 

(d)  Spain.     [L.  A.  Bolin  in  Edinb.   Rev.,  July,   1917,  226:    134-152; 
E.  J.  Dillon  in  Nineteenth  Cent.,  1918,  83:   386-402.] 

2.  Recovery  of  Belgium.    [E.  Cammaerts  in  Contemp.  Rev.,  March, 
1920, 117:  349-365;  J.  M.  Price  in  Fortnightly  Rev.,  1920, 113:  467-i77.] 

3.  The  financial  effort  of  France  during  the  war.     [J.  F.  Bloch  in 
Annals  of  Amer.  Academy  Soc.  and  Pol.  Sci.,  Jan.,  1918,  75:   201-206.] 

4.  Territorial  gains  of  France  in  Europe.    [Bowman,  The  new  world, 
86-91;    Haskins,  in  What  really  happened,  etc.,  45-66.] 

5.  Alsace-Lorraine.     [Haskins,  Some  problems,  chap.  3.] 

6.  The  Saar  Basin  [Haskins,   Some  problems,   chap.   4;    Tardieu, 
chap.  8.] 

7.  Territorial  interests  of  France  outside  Europe.    [Bowman,  91-118.] 

8.  Reconstruction  in  France.    [R.  L.  Buell  in  Amer.  Polit.  Sci.  Rev., 
Feb.,  1921, 15:  27-51;  H.  A.  Gibbons  in  Fortnightly  Rev.,  July,  1919, 112: 
64-76;   Tardieu,  chap.  12.] 

9.  The  question  of  reparations:    the  French  position.     [Tardieu, 
ahap    9.] 

10.  The  question  of  reparations:   criticism  of  the  settlement  [Keynes, 
chap.  5.] 


FRANCE  AND   THE  PROBLEM  OF  REPARATIONS    633 

11.  The  question  of  reparations:   the  American  position.    [Lament, 
chap.  11,  and  Young,  chap.  12,  in  What  really  happened,  etc.:   Baruch, 
13-75.] 

12.  Working  of  the  reparation  settlement.     [Tardieu,  chap.  10.] 

13.  Contributions  of  the  peace  treaties  to  the  control  of  commercial 
practices  and  policy.    [Young,  in  History  of  the  Peace  Conference;  ed.  by 
H.  W.  V.  Temperley,  vol.  5,  London,  1921,  chap.  1,  part  3.] 

BIBLIOGRAPHY 

B.  M.  Anderson,  Jr.,  Effects  of  the  war  on  money,  credit  and  banking, 
N.  Y.,  1919,  Carnegie  Peace,  vol.  15,  covers  both  France  and  the  United 
States,  and  describes  the  course  of  commercial  affairs  in  connection  with 
the  question  of  foreign  exchange.  An  excellent  survey  of  the  course  of 
French  finance  is  provided  by  Gaston  Jeze.,  *  The  economic  and  financial 
position  of  France  in  1920,  in  Quarterly  Journal  of  Economics,  Feb.,  1921, 
35:  175-214;  see  also  Gide  in  Econ.  Journal,  June,  1919,  29:  129-137, 
and  both  the  writers  named  in  Annals  Amer.  Acad.  Soc.  and  Pol.  Sci., 
May,  1921,  95:  151-160. 

On  the  peace  settlement,  **  What  really  happened  at  Paris,  by  Ameri- 
can delegates,  ed.,  E.  M.  House  and  C.  Seymour,  N.  Y.,  1921,  is  well- 
informed  and  represents  the  American  position  with  regard  to  points  at 
issue  better  than  any  other  book.  C.  H.  Haskins  and  R.  H.  Lord,  **  Some 
problems  of  the  Peace  Conference,  Cambridge,  Harvard  Univ.  Press, 
1920,  is  restricted  to  territorial  questions.  I.  Bowman,  **  The  new  world, 
Yonkers,  1921,  treats  particularly  the  problems  in  political  geography 
arising  from  the  settlement,  but  pays  due  attention  to  historical  and 
economic  factors,  and  includes  many  valuable  maps;  the  book  is  indis- 
pensable. 

On  the  subject  of  reparations  the  best  brief  account  is  that  by  Lamont 
and  Young.  Bernard  M.  Baruch,*  The  making  of  the  reparation  and 
economic  sections  of  the  treaty,  N.  Y.,  1920,  is  more  extensive;  it  reprints 
all  clauses  of  the  Versailles  treaty  which  are  of  economic  interest.  Further 
material  will  be  found  in  the  elaborate  History  of  the  Peace  Conference, 
ed.  H.  W.  V.  Temperley,  of  which  five  volumes  had  been  published  in 
1921. 

Andr6  Tardieu,  The  truth  about  the  treaty,  Indianapolis,  1921,  is 
an  eloquent  plea  for  French  claims  in  their  entirety;  J.  M.  Keynes,  The 
economic  consequences  of  the  peace,  N.  Y.,  1920,  condemns  the  reparations 
settlement  as  too  severe.  Either  book  may  mislead  an  uncritical  reader. 

Convenient  sources  of  information  on  the  changing  conditions  of  the 
time  will  be  found  in  Current  History,  a  review  published  monthly  by 
the  N.  Y.  Times,  and  in  Economic  Review  of  the  Foreign  Press,  published 
weekly  in  London. 


CHAPTER   LVII 

CENTRAL  AND  EASTERN  EUROPE,   1914-1920 

754.  Territorial  losses  of  Germany.  —  By  the  terms  of 
peace  Germany  ceded  territory  in  the  west  to  France  and 
Belgium,  in  the  north  to  Denmark,  in  the  east  to  Poland. 
The  most  serious  losses  were  comprised  in  the  provinces  of 
Alsace  and  Lorraine,  and  in  part  of  the  province  of  Silesia. 
Upper  Silesia  contained  mineral  deposits,  particularly  coal, 
which  the  Germans  asserted  to  be  indispensable  to  the  industrial 
development  of  their  country,  and  the  contest  over  the  rights 
involved  delayed  a  decision  for  more  than  two  years  after  the 
signing  of  the  Treaty  of  Versailles.  The  final  award,  rendered 
by  a  commission  of  the  League  of  Nations,  divided  between 
Germany  and  Poland  the  territory  in  dispute  but  arranged 
that  for  a  period  of  fifteen  years  the  whole  area  be  kept  under 
the  control  of  a  commission  which  should  recognize  the  mix- 
ture of  interests  and  should  maintain  free  economic  intercourse. 

The  total  losses  of  Germany,  measured  in  area,  population, 
agricultural  and  industrial  resources,  ranged  from  10  to  15 
per  cent.  Losses  in  particular  resources  of  great  industrial 
importance  were  still  more  serious.  The  country  was  obliged 
to  abandon  mines  supplying  about  one-quarter  of  the  annual 
output  of  coal,  three-quarters  of  the  iron  output,  even  a  higher 
proportion  of  the  output  of  zinc. 

765.  Internal  losses  of  the  country.  —  These  losses  fixed 
by  the  terms  of  peace  were  added  to  the  loss  which  Germany 
had  already  suffered  in  the  course  of  the  war.  The  population 
in  1914  was  68,000,000.  Deaths  in  the  army  amounted  to 
1,800,000,  and  the  number  of  wounded  was  over  4,000,000. 

634 


CENTRAL  AND  EASTERN  EUROPE,  1914-1920         635 

In  the  civilian  population,  also,  the  mortality  in  the  latter  part 
of  the  war  had  been  very  high  and  the  vitality  of  survivors 
was  impaired.  An  indication  of  the  extent  and  character  of 
the  losses  is  provided  by  some  statistics  of  Prussia,  which  show 
a  decline  in  population,  1914-1919,  in  every  province  but  three, 
and  show  a  serious  decline  in  the  proportion  of  males.  In  1914 
there  were  102  women  to  100  men;  in  1919  the  proportion 
was  109  to  100. 

Germany  emerged  from  the  war  not  only  short  in  man 
power,  but  also  weakened  by  the  depreciation  of  capital  and 
in  serious  need  of  some  of  the  most  important  raw  materials. 
The  demands  of  the  army  had  taken  precedence  over  any  other 
consideration,  and  had  in  the  four  years  of  war  stripped  the 
country  almost  bare.  •) 

756.  Effects  of  the  blockade.  —  The  weakening  of  German 
resistance  and  the  final  surrender  were  due  in  large  measure 
to  the  inexorable  blockade  maintained  by  the  allies  of  the 
Entente.  Germany  made  an  extraordinarily  effective  use  of 
what  resources  she  had.  Her  scientists  produced  nitrates 
from  atmospheric  nitrogen  and  so  freed  her  from  dependence 
on  imports  from  South  America  for  her  explosives.  Her  manu- 
facturers made  clothing  for  the  people  from  paper  and  nettle 
fibers.  Her  officials  scoured  the  country  for  copper  and  brass 
implements,  when  the  stock  of  copper  for  munitions  was 
depleted,  and  gleaned  a  surprising  amount  of  metal  for  military 
use.  Her  military  leaders  systematically  looted  the  districts 
which  they  occupied.  There  are  limits,  however,  to  the  achieve- 
ments of  the  most  scientific  synthetic  chemistry,  or  of  the  most 
unscrupulous  and  efficient  administration.  A  substitute 
(Ersatz)  was  provided  for  almost  everything,  as  the  supply  of 
the  original  good  ran  low.  However  successfully  the  substitute 
might  imitate  the  original  in  appearance  it  rarely  proved  to  have 
the  same  efficiency  in  action.  German  locomotives  deteriorated 
because  they  were  lubricated  with  substitute  oils  and  grease; 
the  German  people  ran  down  in  vigor  and  power  of  resistance 
because  they  were  fed  and  clothed  with  substitutes. 


636 


A   HISTORY  OF  COMMERCE 


757.  Commerce  of  Germany  during  the  war.  —  Germany 
maintained  active  commercial  relations  with  the  other  Central 
Powers,  importing  particularly  foodstuffs  from  the  rich  plain 
of  the  Danube  basin,  and  lignite  (brown-coal)  from  Bohemia. 
Trade  with  the  more  distant  allies,  Bulgaria  and  Turkey,  proved 
difficult  and  relatively  unimportant.  Railroad  facilities  were 
in  such  demand  for  the  transfer  of  troops  and  the  movement 
of  munitions  to  the  front,  that  they  could  hardly  be  spared  for 
distant  service  in  southeastern  Europe;  water  carriage  on  the 
Danube  was  preferred  but  was  slow  and  ineffective. 

There  was  a  marked  increase  in  the  value  of  trade  with 
neutral  states,  of  which  three,  Switzerland,  Netherland  and 
Denmark,  were  directly  adjacent,  while  Norway  and  Sweden 
were  separated  only  by  water  which  lay  outside  the  control 
of  navies  of  the  Entente.  These  states  accounted  for  about 
one-seventh  (14%)  of  the  total  trade  of  Germany  in  1913, 
and  took  on  a  new  importance  when  Germany  was  denied  other 
sources  from  which  to  supply  her  wants.  The  German  govern- 
ment has  not  supplied  statistics  by  which  to  measure  changes 
in  trade  during  the  war,  but  they  can  be  traced  in  the  commercial 
istatistics  of  the  neutral  states,  and  are  illustrated  in  the  fol- 
lowing table. 

FOREIGN  TRADE  OF  DENMARK,  1913-1919 

(Values  in  million  crowns;  crown  equals  $.27) 


Total 
imports 

Imports 
from 
Germany 

Total 
domestic 
exports 

Domestic 
exports  to 
Germany 

Total 
foreign 
exports 

Foreign 
exports  to 
Germany 

1913  

855 

328 

637 

159 

84 

20 

1914  

795 

265 

780 

275 

87 

26 

1915  

1,157 

200 

979 

436 

150 

50 

1916  

1,357 

265 

1,177 

653 

132 

38 

1917  

1,082 

237 

968 

482 

97 

6 

1918  

946 

316 

710 

307 

48 

1 

1919  

2,605 

335 

740 

187 

268 

79 

CENTRAL  AND  EASTERN  EUROPE,   1914-1920         637 

A  feature  of  the  table  which  deserves  particular  attention 
is  the  relatively  small  amount  of  foreign  wares  which  reached 
Germany  through  Denmark.  Doubtless  wares  of  this  kind 
were  smuggled  across  the  border  in  considerable  quantities, 
and  so  do  not  appear  in  the  statistics;  but  the  strictness  with 
which  England,  in  behalf  of  the  Entente,  regulated  the  importa- 
tion of  these  wares  by  the  neutral  countries,  allowed  no  large 
surplus  for  export  to  Germany,  and  strangled  the  overseas  trade 
of  that  country. 

Germany  imported  from  all  these  neutral  countries  food- 
stuffs, especially  meat  and  fats;  from  particular  countries  she 
imported  iron  ore,  metals,  and  special  textiles  for  military 
purposes.  Payment  was  made  largely  in  coal  and  iron  products, 
for  which  the  small  states  had  been  used  to  rely  on  Germany, 
and  which  they  sorely  needed. 

758.  Effects  of  the  political  revolution.  —  Sections  above 
enumerated  various  losses  which  Germany  suffered  as  a  result 
of  the  war.  To  appreciate  the  condition  and  prospects  of 
the  country  after  1918  it  is  necessary  to  consider  another 
element  of  weakness,  of  which  the  importance  cannot  be  ques- 
tioned, even  though  it  may  be  hard  to  estimate.  This  is,  namely, 
the  political  revolution  which  accompanied  the  armistice. 

All  the  faults  of  the  military  monarchy  of  the  Hohenzollerns 
appeared  prominently  in  the  outbreak  and  in  the  conduct  of 
the  war.  The  world  paid  a  tremendous  price  to  be  rid  of  it,  and 
did  not  count  the  cost.  The  evils  inherent  in  the  old  political 
system  should  not  be  allowed,  however,  to  blind  our  eyes  to 
•some  merits  that  it  had,  notably  its  honest  and  efficient  ad- 
ministration. They  should  not  obscure  the  important  fact 
that  the  old  system,  however  bad  it  might  be,  was  that  to  which 
the  German  people  were  used,  and  without  which  they  were 
at  a  loss.  The  monarchical  system  was  deep-rooted  in  German 
life.  Most  of  the  people  accepted  it  with  sincere  conviction; 
the  opposition  to  it,  as  exemplified  in  the  party  of  the  Social 
Democrats,  was  perfunctory  rather  than  popular.  In  reliance 
on  the  monarchy  the  people  had  been  content  to  retain  a  pas- 


638  A   HISTORY  OF  COMMERCE 

sive  attitude;  they  lacked  a  sense  of  individual  political  re- 
sponsibility, and  lacked  political  initiative.  When,  therefore, 
the  people  realized  at  last  that  their  trust  had  been  misplaced, 
that  the  war  which  was  to  be  over  (so  they  had  been  assured 
at  its  beginning)  by  Christmas,  1914,  was  never  to  be  ended 
until  they  had  confessed  to  utter  defeat,  they  swept  away  the 
old  system  but  did  not  know  how  to  operate  the  political  ma- 
chine which  they  erected  in  its  place.  Attempts  at  social  revolu- 
tion by  the  radical  Spartacists,  infected  by  Russian  doctrines, 
and  at  reaction  by  adherents  of  the  old  military  monarchy, 
rendered  the  new  republic  insecure  at  its  foundations;  while 
the  desperate  conditions  of  life  prevailing  at  the  close  of  the 
war  shattered  the  former  administrative  organization  and 
rendered  the  new  administration  costly  and  ineffective. 

759.  Peculiar  importance  to  Germany  of  sound  politics.  — 
A  decline  in  political  efficiency  will  have  a  more  serious  effect 
on  the  productive  organization  in  Germany  than  it  would  have 
in  other  countries  for  two  reasons.  (1).  The  state  has  taken  a 
particularly  active  part  in  the  control  of  economic  affairs.  Its 
power  over  them  was  greatly  extended  in  the  course  of  the  war, 
and  is  still  so  great  that  much  depends  on  the  wise  exercise 
of  this  power.  (2).  The  state  will  transmit  to  the  people  by 
taxation  the  burden  of  paying  reparations.  This  burden  will 
be  and  ought  to  be  a  heavy  one.  The  minimum  amount  to  be 
paid  annually,  under  the  terms  of  the  London  Settlement  of 
1921,  is  variously  estimated  by  German  economists  to  amount 
to  8  or  16  or  28  per  cent  of  the  total  real  income  of  the  country. 
The  proportion,  if  we  choose  the  middle  figure,  does  not  seem 
unduly  high.  Many,  perhaps  most,  American  families  could 
sacrifice  one-sixth  of  their  income,  and  still  retain  the  essentials 
of  health  and  happiness.  Conditions  were  very  different  in 
Germany  at  the  close  of  the  war.  A  considerable  part  of  the 
people  was  on  a  stage  of  living  which  may  fairly  be  termed  a 
minimum;  depression  below  that  stage  implied  an  actual  loss 
in  productive  efficiency.  Under  these  conditions  it  was  of 
peculiar  importance  that  the  tax  system  should  be  just  in 


CENTRAL  AND  EASTERN  EUROPE,   1914-1920         639 

principle,  economical  and  impartial  in  administration.  No 
slight  importance,  therefore,  attaches  to  the  fact  that  the  govern- 
ment even  in  1921,  three  years  after  the  armistice,  was  still 
unable  to  balance  its  budget,  and  was  meeting  its  domestic 
obligations  by  issuing  more  and  more  paper  money,  a  tax 
which  in  the  long  run  is  of  all  taxing  devices  the  least  effective 
and  in  its  immediate  effects  is  the  most  iniquitous. 

760.  Dismemberment  of  Austria-Hungary.  —  Some  time 
before  the  end  of  the  war,  while  the  power  of  resistance  in 
Germany  still  was  strong,  Austria-Hungary  gave  evidence  of 
distress.  The  state  had  been  held  together  by  the  military 
dominance  of  a  minority,  and  as  the  end  of  the  war  approached 
and  the  failure  of  the  military  party  was  evident,  the  state 
dissolved  into  its  component  parts  by  a  natural  process  quite 
independent  of  any  action  of  the  Entente. 

Fragments  of  the  old  dual  monarchy  were  absorbed  by 
bordering  countries.  Galicia,  the  great  crescent -shaped  province 
lying  to  the  east  of  the  Carpathian  mountains,  went  to  the  new 
state  of  Poland.  It  had  been  grievously  ravaged  in  the  course 
of  the  war,  but  promised  to  develop  in  time  considerable  agri- 
cultural resources,  and  was  particularly  prized  for  its  supply 
of  petroleum  in  the  east  and  the  coal  mines  of  the  Teschen 
district  attached  to  it  in  the  west.  Transylvania,  with  parts 
of  some  adjacent  provinces,  brought  to  Rumania  an  area  rich 
in  forest  products,  with  some  mineral  resources  and  some  fertile 
grain  land  (Banat  of  Temesvar).  Rumania  became  by  these 
accessions  and  by  the  acquisition  of  Bessarabia,  on  the  Russian 
border,  one  of  the  larger  states  of  Europe,  with  a  population 
(about  16  million)  double  that  of  Jugo-Slavia,  the  next  largest 
state  in  the  Balkan  peninsula.  This  new  state  grew  out  of  the 
old  Kingdom  of  Serbia,  in  which  the  World  War  began,  and 
which  was  finally  rewarded  for  its  sufferings  in  the  war  by 
union  with  the  kindred  people  along  the  Adriatic  coast  and  in 
the  southwest  of  the  old  dual  monarchy.  The  trials  of  Jugo- 
slavia were  not  ended  with  the  war,  for  it  had  still  to  make  good 
its  claims  to  Fiume,  its  natural  outlet  at  the  head  of  the  Adriatic. 


640  A   HISTORY  OF   COMMERCE 

The  justice  of  its  claims  were  not,  in  the  opinion  of  the  writer, 
open  to  serious  dispute,  but  Italy,  which  had  already  pushed 
its  Alpine  frontier  far  past  the  Austrian  districts  occupied  by 
an  Italian  population,  was  jealous  of  a  possible  rival  in  the 
Adriatic,  and  refused  to  agree  to  the  occupation  of  Fiume  by 
another  power.  The  unfortunate  exploits  of  the  Italian  bravado, 
D'Annunzio,  complicated  the  issue,  but  it  was  at  least  settled 
by  a  compromise  between  the  two  powers  which  promised  in 
the  course  of  time  to  give  Jugo-Slavia  the  commercial  outlet 
essential  to  its  prosperity. 

761.  Czecho-Slovakia.  —  Of  the  new  states  formed  within 
the  boundaries  of  Austria-Hungary  that  which  gave  the  greatest 
promise  of  prosperity  was  Czecho-Slovakia,   comprising  the 
old  kingdoms  of  Bohemia  and  Moravia,  and  extending  to  the 
southeast  to   include  the  Slovak   population  which  had  for- 
merly been  included  in  the  kingdom  of  Hungary.     This  new 
state  took  that  part  of  the  old  monarchy  which  was  most 
richly  endowed  with  natural  resources  and  which  had  attained 
the  highest  industrial  development.     Stating  the  proportions 
approximately  it  included  only  one-fifth  of  the  area  of  Austria- 
Hungary,   but  in  that  fraction  comprised  one-third  of  the 
factory  workers  and  over  one-third  of  the  mining  population. 
The  land  was  fertile  and  highly  cultivated,  supporting  a  dense 
population  and  providing  a  surplus  of  food  for  export.     The 
Czechs  could  look  back  with  pride  to  a  period  in  the  past 
when  they  were  one  of  the  leading  peoples  of  Europe,  and  they 
had  prepared  themselves  for  self-government  by  long  struggles 
against  the  oppressions  of  German  rulers. 

Although  Czecho-Slovakia  is  far  distant  from  the  sea  it 
has  means  of  access  to  it  both  by  the  Elbe  and  by  the  Danube, 
and  is  at  the  heart  of  the  railroad  system  of  central  Europe. 
Provided  with  a  surplus  of  products  keenly  desired  in  neigh- 
boring states,  particularly  coal,  iron  and  food,  its  commercial 
future  appears  to  be  assured. 

762.  Magyar  Hungary;  German  Austria.  —  Far  less  favor- 
able was  the  condition  of  the  two  states,  Austria  and  Hungary, 


CENTRAL  AND  EASTERN  EUROPE,  1914-1920         641 

which  had  been  the  seat  of  the  power  of  the  Hapsburgs  in  the 
past,  and  which  had  prospered  when  they  had  been  supported 
by  the  labor  of  subject  peoples,  but  which  were  now  shorn  of 
this  support,  and  given  each  its  own  way  to  make  in  the  world. 

The  Magyar  state  of  Hungary  offered  at  least  tolerable 
prospects  of  success.  Although  it  lost  the  border  lands  which 
had  formerly  supplied  practically  all  its  forest  products  and 
much  of  its  minerals,  it  retained  a  compact  and  fertile  territory, 
one  of  the  granaries  of  central  Europe,  and  could  hope 
to  exchange  its  surplus  wheat  for  the  products  which  it 
needed. 

German  Austria  was  left  by  the  terms  of  peace  in  a  pitiable 
condition.  It  retained  a  population  of  only  6  million,  including 
less  than  half  of  the  German-speaking  people  in  the  old  dual 
monarchy.  Of  this  total  nearly  one-third  (1.8  million,  1920) 
was  comprised  in  the  single  city  of  Vienna,  which  had  grown 
to  this  size  largely  by  the  political  advantage  that  it  enjoyed 
as  one  of  the  capitals  of  a  great  state.  Much  of  the  area  of  the 
new  state  was  mountainous,  suited  to  grazing  but  not  adapted 
to  intensive  agriculture.  Before  1914  the  territory  of  the  pres- 
ent state  was  able  to  produce  perhaps  two-thirds  of  the  necessary 
food  supplies  consumed  by  its  inhabitants;  in  1920,  with  powers 
depleted  by  the  war,  it  could  render  only  one-quarter.  Endowed 
with  only  one  mineral  resource,  iron  mines  inStyria,  Austria  could 
buy  the  food  required  for  the  maintenance  of  life  only  by  the 
exchange  of  industrial  products  made  with  imported  coal  out 
of  imported  raw  materials.  At  the  close  of  the  war  the  situation 
of  the  country  was  indeed  desperate,  for  the  people  had  no 
resource  with  which  to  make  a  start  in  the  process  of  foreign 
trade.  Gradually  markets  were  opened,  and  some  basis  of 
credit  was  found  for  the  beginning  of  commercial  transactions, 
but  meanwhile  the  government  had  plunged  deep  in  the  issue 
of  paper  money,  which  depreciated  so  far  that  itself  formed  a 
grave  obstacle  to  economic  recovery.  Austria  seemed  destined 
for  years  to  come  to  rely  upon  charity,  whether  private,  public 
or  international;  and  many  questioned  the  wisdom  of  the  peace 


642  A   HISTORY  OF  COMMERCE 

settlement  which  forbade  the  union  of  this  fragment  of  the 
German-speaking  people  with  the  rest  of  Germany. 

763.  Poland;   earlier  history.  —  The  World  War  made  its 
greatest  change  in  the  map  of  Europe  not  by  the  transfers  of 
territory  between  bordering  states,  important  as  these  were  to 
the  parties  concerned,  not  by  the  creation  of  new  states  like 
Czecho-Slovakia  but  by  the  resurrection  of  an  old  state,  Poland. 
Poland  had  played  no  great  part  in  commerce  in  the  previous 
period  of  its  existence.    The  surplus  supplies  of  wheat  grown 
on  the  great  estates  of  its  landlords  had  been  carried  by  road 
and  river  to  Danzig,  to  be  shipped  to  western  Europe  in  ex- 
change for  metals,  manufactured  wares  and  exotic  products 
that  made  the  life  of  the  Polish  nobleman  more  comfortable. 
The  country  as  a  whole  was  too  backward  and  too  far  removed 
from  the  centers  of  European  progress  to  become  an  important 
member  of  the  commercial  system  of  the  time. 

The  partitions  of  Poland  at  the  end  of  the  eighteenth  century 
keenly  as  they  were  felt  by  patriots,  made  little  difference  in 
the  life  of  the  mass  of  the  people  The  divided  people  went 
their  separate  ways :  neglected  by  Austria,  schooled  and  drilled 
by  Prussia,  given  in  Russia  at  least  access  to  an  enormous  market 
which  was  later  to  be  a  great  stimulus  to  manufacture.  Most 
of  the  people  were  employed  in  agriculture  under  a  system  of 
serfdom  like  the  medieval.  They  were  freed  from  this  in  the 
nineteenth  century,  and  acquired  in  small  holdings  much  of  the 
land  which  had  formerly  been  held  in  great  estates.  A  turning 
point  in  the  economic  history  of  the  Polish  people  came  in  the 
last  quarter  of  the  nineteenth  century,  when  manufactures 
developed  rapidly  in  Russian  Poland,  fostered  by  the  high 
protective  tariff. 

764.  Resources  of  the  new  Poland.  —  The  new  state  of 
Poland  was  welcomed  and  supported  by  the  Entente  as  a  check 
on  Germany.    With  a  population  of  about  25  million  it  had 
claim  to  a  place  among  the  larger  powers  of  Europe.    Its  eco- 
nomic endowment  was  adequate  if  not  abundant;    besides  a 
sufficiency  of  arable  land  and  great  forests  it  had  coal  supplies 


CENTRAL  AND  EASTERN  EUROPE,   1914-1920        643 

comparable  in  amount  to  those  of  France,  the  oil  of  Galicia, 
and  other  mineral  resources.  Its  gravest  lack  was  that  of 
experience  in  organization,  group-action,  both  in  economics  and 
in  politics.  In  manufactures  the  Poles  have  looked  to  Jews 
and  Germans  for  leadership;  the  Poles  have  supplied  labor, 
but  have  only  by  exception  taken  a  place  among  those  re- 
sponsible for  control.  Their  manufactures  showed  a  high  labor 
cost  and  heavy  capital  charge  per  unit  of  product.  Behind 
the  barrier  of  the  Russian  tariff  they  prospered.  They  could 
doubtless  be  maintained  for  the  supply  of  domestic  needs  by 
protection,  but  they  have  shown  slight  capacity  to  win  in  the 
world  market  the  opening  which  was  formerly  afforded  to  them 
by  Russia. 

765.  Prospects  of  Poland.  —  In  the  field  of  politics,  as  in 
economic  affairs,  the  Poles  have  yet  to  prove  their  mastery  of 
the  complicated  problems  that  arise  in  the  organization  of  a 
modern  great  state.    In  the  years  following  the  armistice  that 
closed  the  war  they  showed  a  readiness  for  military  adventure 
that  boded  ill  for  the  future  of  a  country  needing  all  its  resources 
for  economic  reconstruction.     They  soon  contracted  a  heavy 
debt,  by  the  accumulation  of  huge  deficits  in  the  budget  and  the 
endeavor  to  pay  their  way  by  printing  paper  money.     The 
Polish  mark,  nominally  equal  to  the  German  and  therefore 
worth  about  $.24,  declined  to  a  point  (Sept.,  1921)  at  which 
6,700  were  exchanged  for  the  American  dollar.    The  position  of 
Poland  is  difficult  at  best,  and  the  prospects  of  the  new  state 
will  be  seriously  impaired  if  a  more  sober  spirit  does  not  pre- 
vail in  the  national  councils. 

766.  Russia  and  the  revolution  of  1917.  —  From  the  begin- 
ning of  the  war  southern  Russia  was  cut  off  from  commercial 
contact  with  the  Entente  by  the  closing  of  the  straits  leading 
into  the  Black  Sea.    In  the  north  the  Baltic  was  likewise  closed. 
Contact  was  maintained  only  on  Russia's  Arctic  coast,  and  by 
the  Siberian  railroad.     Means  oi  access  by  both  routes  were 
difficult  and  expensive;  the  exchange  of  products  was  restricted 
to  those  that  served  imperative  military  needs. 


644  A   HISTORY  OF  COMMERCE 

Since  the  Russian- Japanese  war  of  1904  the  forces  of  revolu- 
tion had  been  gathering  in  Russia.  The  World  War  brought 
these  to  an  explosion  by  the  sufferings  that  it  imposed  upon  the 
people  and  by  the  exposure  that  it  made  of  the  weakness  and 
corruption  of  the  autocratic  government.  In  March,  1917,  an 
outbreak  at  Petrograd  initiated  a  revolution  that  in  six  months 
ran  through  nearly  as  many  stages,  tending  always  in  a  radical 
direction  and  leaving  the  government  finally  in  the  control  of 
the  Communist  or  Bolshevik  party. 

767.  Soviets  and  Bolsheviks.  —  In  the  earlier  stages  of  the 
revolution  great  influence  was  exercised  by  Soviets,  councils, 
formed  on  a  democratic  basis  to  represent  workers  in  factories, 
peasants  and  soldiers,  against  the  traditional  leaders  of  the  old 
regime.     The  Soviets  were  features  of  a  world-wide  popular 
movement,  which  found  their  counterpart  in  the  shop-councils 
of  England  and  of  the  United  States.     The  close  of  the  war 
left  the  future  of  this  movement  still  in  doubt,  but  it  appeared  to 
offer  a  wholesome  and  welcome  change  in  industrial  relations, 
provided  the  workers  were  willing  to  accept  responsibilities  cor- 
responding to  the  powers  that  they  claimed.    It  is  important  ta 
an  understanding  of  the  Russian  revolution  to  realize  that  the 
democratic  features  of  the  soviet  system  were  soon  abandoned. 
The  Bolsheviks  counted  less  than  a  million  in  a  population  of 
120  million;   they  numbered  certainly  less  than  2  per  cent  of 
the  adult  population.    By  their  boldness  and  vigor  they  domi- 
nated the  situation,  and  while  they  maintained  the  pretence  of 
deferring  to  the  popular  will  they  acted  as  tyranically  and  un- 
scrupulously as  the  autocracy  which  had  preceded  them. 

768.  Difficulties    of    the    Bolsheviks.  —  The    Bolsheviks 
accepted  as  gospel  the  economic  doctrines  of  Karl  Marx,  the 
founder  of  modern  socialism,  and  many  enthusiasts  for  social 
experiments  ("parlor-Bolsheviks")  have  expressed  regret  that 
they  did  not  have  a  better  field  in  which  to  try  out  these  doc- 
trines.   Russia  was  already  w^-worn  to  desperation  when  the 
revolution  took  place.     Fighting  continued,  not  alone  on  the 
external  front  but  now  also  in  civil  conflicts  which  ravaged  the 


CENTRAL   AND   EASTERN  EUROPE,  1914-1920        645 

face  of  the  country.  The  states  of  the  Entente  found  not 
merely  that  they  had  lost  an  ally,  but  also  that  a  new  enemy  to 
them  had  arisen,  preaching  doctrines  subversive  of  the  estab- 
lished order  and  threatening  to  undermine  their  power  when 
the  struggle  with  Germany  was  at  its  height.  They  stimulated 
in  Russia  opposition  to  the  rule  of  the  Bolsheviks,  and  sought 
so  far  as  they  were  able  to  seal  Bolshevik  Russia  in  isolation 
lest  it  profit  by  the  exchange  of  goods,  and  spread  its  doctrines. 

769.  Failure  of  Bolshevist  communism.  —  Under  the  con- 
ditions Bolshevism  was  a  disastrous  failure.    Curiously  enough 
it  showed  its  greatest  efficiency  in  the  field  of  military  affairs. 
In  its  own  particular  department,  the  production  and  distri- 
bution of  economic  goods,  it  brought  Russia  to  destitution. 
Fixed  capital  inherited  from  the  old  order  wore  out  and  was 
not   replaced.     Railroads   and    factories   ceased   to  function 
properly,  not  only  because  of  depreciation  of  equipment  but 
also  because  of  a  decline  in  the  efficiency  of  laborers.    The 
yield  of  agriculture  declined  so  far  that  a  large  part  of  the 
population  was  threatened  with  the  starvation  that  visited 
whole  provinces.    Pretensions  to  forms  of  social  service  which 
other  governments  did  not  render  were  too  often  found  on 
critical  examination  to  be  mere  shams;  they  certainly  counted 
for  nothing  over  against  the  gross  neglect  to  provide  for  the 
elementary  needs  of  the  people. 

770.  Prospects  of  Russia.  —  Years  after  it  had  begun  the 
Russian  revolution  was  still  in  process  of  development,  and 
promised  to  disturb  the  life  of  the  people  for  years  to  come. 
By  1921  communism  was  a  recognized  failure,  but  the  lines 
that  would  be  followed  in  the  re-establishment  of  society  on 
the  basis  of  private  property  defied  prediction.     Of  this  we 
may  be  sure,  that  for  decades,  perhaps  for  a  generation  fol- 
lowing the  war,  Russia  will  count  for  little  in  the  history  of 
commerce.    Little  by  little  its  economic  structure  will  be  re- 
organized.   The  leaders  in  the  process  will  be  private  individ- 
uals from  other  countries,  including   probably  a  large  pro- 
portion of  Germans.    The  process  will  be  slow  because  it  will 


646  A   HISTORY  OF  COMMERCE 

be  retarded  by  political  instability.  Russia  can  hardly  be 
divided  into  parts;  Russia  can  hardly  be  governed  as  a  whole. 
Economic  recovery  will  be  a  tedious  and  painful  process  be- 
cause it  must  wait  upon  the  political  education  of  a  people 
who  in  1914  had  made  but  the  barest  beginnings  in  national 
self-government. 

QUESTIONS  AND  TOPICS 

1.  Territorial  losses  of  Germany  in  the  peace  settlement.    [Haskins 
.in  What  really  happened,  etc.,  chap.  3;    Bowman,  chap.  10.] 

2.  Effect  of  the  blockade  on  Germany.    [A.  E.  Taylor  in  American 
World's  Work,  Oct.,  1919,  38:    590-600;    W.  J.  Ashley  in  Quart.  Rev., 
Oct.,  1915,  224:   444  ff.] 

3.  German  war  finance.    [W.  S.  Ford  in  Fortnightly  Rev.,  Apr.,  1919, 
111:    616-624.] 

4.  The  new  government  in  Germany.     [W.  J.  Shepard  in  Amer. 
Polit.  Sci.  Rev.,  Aug.,  1919,  13:   361-378.] 

5.  Partition  of  Austria-Hungary.    [Seymour  in  What  really  happened, 
etc.,  chap.  5.] 

6.  The  enlarged  state  of  Rumania.     [Bowman,  chap.  15.] 

7.  Jugo-Slavia.    [Bowman,  chap.  14.] 

8.  Problem  of  Fiume  and  the  Adriatic.     [Johnson  in  What  really 
happened,  etc.,  chap.  6.] 

9.  Czecho-Slovakia.     [Bowman,  chap.  13;    M.  O.  Williams  in  Nat. 
Geog.  Magazine,  Feb.,  1921,  39:    111-156.] 

10.  The  new  Hungary.    [Bowman,  chap.  12.] 

11.  The  republic  of  Austria.   [Bowman,  chap.  11;  Fortnightly  Review, 
April,  1919,  111:   625-635;   S.  Hoare  in  Nineteenth  Century,  1920,  87: 
409-423.] 

12.  The  resurrection  of  Poland.    [Lord  in  What  really  happened,  etc., 
chap.  4;   in  Haskins  and  Lord,  Some  problems,  chap.  5.] 

13.  Problems  of  the  new  Poland.    [Bowman,  chap.  19.] 

14.  Agriculture  and  landownership  in  Poland.     [Arctowski,  Geog. 
Rev.,  Apr.,  1921,  11:    161-171.] 

15.  Elements  in  the  Russian  revolution.    [Sir  S.  Buchanan  in  Fort- 
nightly Rev.,  1918,  110:    819  ff.;    P.  Vinogradoff  in  Quarterly  Review, 
July,  1917,  228:    184-200.] 

16.  The  Soviets.    [Spargo,  chap.  2,  3.] 

17.  The  land  question  and  the  revolution.    [Spargo,  chap.  5.] 

18.  Industry  under  the  Soviets.     [Spargo,  chap.  8.] 

19.  Nationalization  of  industry.     [Spargo,  chap.  9,  10.] 


CENTRAL  AND  EASTERN  EUROPE,  1914-1920        647 

BIBLIOGRAPHY 

The  German  government  supplied  no  official  statistics  of  trade  during 
the  period  of  the  war,  and  the  student  is  obliged  to  look  to  the  publica- 
tions of  other  governments  for  information.  C.  D.  Snow  and  J.  J.  Krai, 

*  German  trade  and  the  war,  Washington,  1918,  Bureau  of  For.  and  Dom. 
Commerce,  Misc.  Series  no.  65,  will  be  found  a  convenient  compilation; 
this  covers  trade,  manufacture,  raw  materials  and  substitutes,  cartels, 
labor,  finance,  etc. 

References  to  the  effect  of  the  peace  settlement  on  the  interests  ot' 
Germany  and  Austria-Hungary  will  be  found  in  the  Questions  and  topics, 
and  in  the  bibliography  of  the  preceding  chapter. 

Literature  on  the  new  states  in  central  and  eastern  Europe  is  mainly 
in  foreign  languages;  readers  of  English  have  to  depend  on  accounts  in 
annual  encyclopedias,  on  statistics  gathered  in  annuals  such  as  the  States- 
man's Year  Book,  and  on  reports  of  American  and  English  consular  agents. 
On  Poland  the  reader  may  consult  a  brief  encyclopedic  account  edited  in 
the  English  version  by  E.  Piltz,  entitled  *  Poland;  her  people,  history, 
industries,  etc.,  London,  1916;  A.  B.  Boswell,  Poland  and  the  Poles, 
N.  Y.,  1919;  and  an  elaborate  study  on  The  Polish  peasant  in  Europe 
and  America,  by  W.  S.  Thomas  and  F.  Znaniecki,  in  5  volumes,  Chicago 
1918,  Boston  1919-1920. 

On  the  Russian  revolution  John  Spargo,  **  The  greatest  failure  in 
all  history,  N.  Y.,  1920,  can  be  recommended  as  a  book  filled  with  facts, 
which  has  in  general  stood  well  the  criticism  of  those  inclined  to  favor 
the  Bolsheviks.  The  failure  of  Bolshevism  is  amply  evidenced  by  the 
writings  of  honest  partisans  of  the  revolution,  such  as  Albert  H.  Williams, 
Lenin,  N.  Y.,  1919;  Arthur  Ransome,  The  crisis  in  Russia,  London,  1921; 
C.  L.  Malone,  The  Russian  republic,  N.  Y.,  1920;  Bertrand  Russell,  The 
practice  and  theory  of  Bolshevism,  London,  1920.  Maurice  G.  Hindus, 

*  The  Russian  peasant  and  the  revolution,  N.  Y.,  1920,  gives  a  good  ac- 
count of  the  agrarian  question,  and  a  questionnaire  prepared  from  docu- 
mentary material  by  the  International  Bureau  of  Labor,  entitled  in  the 
English  version  Labour  conditions  in  Soviet  Russia,  London,  1920,  throws 
*nuch  light  on  the  industrial  conditions. 


CHAPTER   LVIII 


THE  UNITED   STATES,   1914-1920 

771.   Statistics  of  American  Commerce,  1914-1920.  —  The 

course  of  the  commerce  of  the  United  States  during  the  war 
and  the  few  years  of  peace  immediately  following  appears 
in  the  statistics  of  the  accompanying  table,  in  which,  for  rea- 
sons that  will  appear  later,  the  movement  both  of  merchandise 
and  of  specie  is  indicated. 

TRADE  OF  UNITED  STATES,  1914r-1920 
(Values  in  millions  of  dollars;  calendar  years,  ending  Dec.  31)  * 


Merchandise 

Gold 

Silver 

Imports 

Exports 

Excess  of 
exports 

Excess  of 
exports 

Excess  of 
imports 

Excess  of 
exports 

level 

1914 

1,789 

2,114 

324 

165 

26 

100 

1915 

1,779 

3,555 

1,776 

421 

19 

101 

1916 

2,392 

5,483 

3,091 

530 

38 

124 

1917 

2,952 

6,226 

3,274 

181 

31 

176 

1918 

3,031 

6,149 

3,118 

21 

181 

196 

1919 

3,904 

7,920 

4,016 

292 

150 

212 

1920 

5,279 

8,228 

2,949 

107 

26 

243 

Total 

21,127 

39,675 

18,548 

457 

1,259 

471 

*  The  table  is  taken  from  Report  of  Comptroller  of  the  Currency,  1920, 
vol.  1,  p.  14,  a  convenient  source  because  both  merchandise  and  specie  are 
enumerated  by  calendar,  not  fiscal  year.  I  have  corrected  the  table  by 
reducing  by  1  milliard  the  figure  for  exports  in  1914,  to  accord  with  veri- 
fied commercial  statistics,  and  have  altered  the  figures  of  excess  of  exports 
in  1914,  and  for  'total  exports  and  total  excess  to  accord  with  this  correc- 
tion. The  student  who  checks  the  figures  by  reference  to  U.  S.  Statistical 
Abstract,  1920,  p.  773,  should  not  be  dismayed  by  finding  there  the  exports 
for  1915  listed  at  2,555  millions;  it  is  another  example  of  a  milliard  dollar 
error. 

648 


THE  UNITED  STATES,   1914-1920  649 

772.  Interpretation  of  the  Statistics.  —  With  the  figures  of 
this  table  should  be  compared  those  given  in  section  663, 
covering  the  course  of  trade  from  1860  to  1913.  Attending 
only  to  the  figures  giving  the  value  of  merchandise  the  reader 
will  note  that  the  imports  in  the  early  years  of  the  war  remained 
about  at  their  former  level,  that  they  increased  in  the  latter 
part  of  the  war,  and  particularly  after  its  close.  The  exports, 
on  the  other  hand,  showed  the  effect  of  the  war  almost  from 
its  beginning.  They  had  first  exceeded  1  milliard  dollars  in 
1896,  and  had  grown  steadily  with  the  growth  of  population 
and  with  the  rise  in  prices  due  to  the  increase  in  gold  output, 
passing  the  mark  of  2  milliards  in  1911.  From  that  level  they 
now  shot  up  to  3,  4,  5,  6,  6,  8,  8  milliards  in  the  individual 
years;  history  does  not  provide  another  example  of  such  pro- 
digious growth.  As  a  result  the  excess  value  of  exports  over 
imports,  which  had  in  recent  years  been  about  half  a  milliard, 
grew  to  1,  2,  3,  even  4  milliard  dollars  a  year. 

Part  of  the  increase  in  the  value,  both  of  imports  and  of 
exports,  was  of  course  due  to  the  rise  in  prices  which  accom- 
panied the  war.  To  enable  the  student  to  make  the  necessary 
correction  for  this  factor  a  column  of  the  table  supplies  the 
"index-number"  of  the  Department  of  Labor,  showing  what 
the  average  wholesale  prices  were  in  any  year  compared  with 
the  years  1913-1914.  Evidently  if  prices  in  1918-1919  were 
double  what  they  had  been  just  before  the  war,  the  figures  for 
the  value  of  trade  in  those  years  should  be  divided  by  2  to 
give  an  idea  of  the  actual  quantities  of  goods  exchanged. 
Applying  this  process  of  correction  the  student  will  note  that 
the  volume  of  imports  actually  shrank  in  the  course  of  the  war, 
but  that  the  exports,  in  spite  of  this  process  of  reduction, 
reached  a  level  which  had  not  before  been  dreamed  of.  In 
fact  the  figures  for  exports  in  1918  and  for  parts  of  1917  and  1919 
do  not  take  account  of  the  great  quantities  of  stores  shipped 
from  the  country  in  transports  of  the  government,  and  there- 
fore not  reported  to  the  customs  officials;  the  figures  should 
be  raised  by  perhaps  one-third  to  give  a  comprehensive  idea 


650  A  HISTORY  OF  COMMERCE 

of  the  total  quantity  of  goods  sent  out  in  that  period  of  greatest 
national  exertion. 

773.  Increase  in  value  of  exports  to  Europe.  —  Not  only 
did  the  thoughts  of  the  whole  world  center  in  Europe  during 
the  war;  the  wares  of  the  world  flowed  thither,  in  unexampled 
volume,  to  be  used  to  destroy  and  to  be  destroyed.    For  rea- 
sons already  given  the  European  belligerents  cut  down  their 
exports,  and  strove  so  far  as  they  could  to  increase  the  volume 
of  their  imports.     The  United  States  was  in  the  reverse  posi- 
tion.   While  it  was  still  neutral,  and  likewise  after  it  entered 
the  war  (April,  1917),  it  was  the  great  source  from  which  the 
European  states  supplied  the  needs  which  they  had  not  time 
or  strength  to  supply  themselves.     Although  the  larger  part 
of  central  and  of  eastern  Europe  was  cut  off  by  the  blockade 
and  by  the  difficulties  of  transportation,  the  exports  of  the 
United  States  to  Europe,  which  before  the  war  had  run  a  little 
over  1  milliard,  increased  to  2,  3  and  4  milliards.    In  the  first 
full  year  of  peace,  1919,  when  the  larger  part  of  Europe  was 
again  open  to  trade,  and  the  exhausted  peoples  were  endeavor- 
ing to  restock,  the  value  of  exports  to  Europe  exceeded  5  mil- 
Hard  dollars  in  value. 

774.  Increase  in  value  of  exports  to  other  continents.  — 
The  figures  of  the  preceding  section  give,  however,  but  a  par- 
tial and  misleading  idea  of  the  peculiar  position  which  the 
United  States  assumed  in  the  economy  of  the  world  during  the 
war.    In  spite  of  the  great  increase  in  value,  and  increase  in 
quantity,  of  exports  to  Europe,  the  proportion  of  the  total 
exports  which  went  to  Europe  rose  very  little.     As  shown 
above  (sect.  708),  the  United  States  had  tended,  in  the  years 
before  the  war,  to  distribute  its  exports  more  widely.    The  pro- 
portion which  exports  to  Europe  formed  of  the  total  dropped 
from  four-fifths  in  the  '80's  to  three-quarters  about  1900,  then 
to  two-thirds;    in  1913  the  proportion  was  60  per  cent. 

The  figures  for  the  war  period  were  71,  69,  69,  63;  in  1920 
the  figures  dropped  to  54.  It  is  apparent  that  there  was  a 
great  expansion  of  exports  in  this  period,  not  only  to  Europe 
but  to  other  parts  of  the  world  as  well. 


THE   UNITED  STATES,   1914-1920 


651 


To  understand  this  situation  we  must  remember  that  the 
United  States  had  not  only  to  meet  the  demands  of  the  emer- 
gency in  Europe,  but  also  had  to  take  the  place  of  the  great 
industrial  states  of  Europe  in  meeting  the  demands  of  the  rest 
of  the  world.  England,  Germany,  and  France  were  unable  to 
sell  goods  in  their  usual  markets,  and  the  United  States  for  the 
time  took  over  their  old  customers. 

775.  Statistics  of  distribution  of  exports.  —  Exports  from 
the  United  States,  therefore,  increased  greatly  in  value,  not 
only  to  Europe  but  also  to  other  continents.  The  following 
table  indicates  the  distribution  of  exports  in  the  period  of  the 
war;  Oceania  and  Africa,  taking  together  five  per  cent  or  less 
of  American  exports,  are  omitted. 

EXPORTS  OF  THE  UNITED  STATES,  IN  MILLIONS  OF  DOLLARS,  TO 


Europe 

North 
America 

South 
America 

Asia 

1914  

1,486 

529 

125 

113 

1915  

1  971 

477 

99 

114 

1916  

2,999 

733 

180 

279 

1917  

4,325 

1,164 

259 

380 

1918  

3732 

1  236 

315 

447 

1919  *  

5,188 

1,296 

442 

701 

1920  *  

4,466 

1,929 

624 

772 

*  Calendar  years;  1914-1918  fiscal  years  ending  June  30. 

The  distribution  of  American  exports  in  Europe  has  already 
been  described.  Of  the  countries  grouped  under  the  heading 
North  America,  Canada  accounted  for  rather  more  than  half 
of  the  total;  Cuba  and  Mexico  also  bought  greatly  increased 
amounts  of  the  exports  of  the  United  States.  In  South  America, 
Argentina,  Brazil,  and  Chile  increased  their  purchases  three- 
or  four-fold;  in  Asia,  Japan  raised  the  value  of  its  purchases 
from  about  50  to  over  300  million  dollars. 

776.  Changes  in  the  composition  of  exports.  —  This  expan- 
sion was  shared  unequally  by  the  different  groups  of  oommodi- 


652  A   HISTORY  OF  COMMERCE 

ties  which  together  made  up  the  total  exports.  Raw  materials 
for  manufacture  declined  in  importance;  before  the  war  they 
had  accounted  for  about  one-third  of  the  total  exports,  but 
by  1917  they  made  up  only  about  one-eighth.  On  the  other 
hand  there  was  a  great  increase  in  the  export  of  foodstuffs. 
The  United  States  had  tended  in  the  period  immediately  pre- 
ceding the  war  to  consume  an  ever-increasing  proportion  of 
the  foodstuffs  that  it  produced.  The  export  of  foodstuffs, 
raw  and  manufactured,  had  declined  to  about  500  million 
dollars  in  the  years  1910-1913.  In  the  early  years  of  the  war 
it  rose  to  about  1  milliard;  in  1918  it  amounted  to  almost 
2  milliards,  and  in  the  first  two  years  of  peace  it  exceeded  that 
figure. 

That  part  of  American  trade  which  showed  the  most  extra- 
ordinary expansion  was  the  export  of  manufactures.  Before 
the  war  the  value  of  finished  manufactures  exported  had  aver- 
aged about  700  million.  In  1915  the  figure  exceeded  1  milliard; 
in  1916  and  succeeding  years,  2  milliards;  in  1920,  3  milliards. 
The  growth  was  particularly  noticeable  in  trade  with  non- 
industrial  countries,  which  had  previously  relied  in  large  part 
on  Europe  for  manufactured  wares  and  found  now  the  supply 
from  that  source  cut  off.  Exports  of  manufactures  from  the 
United  States  to  Asia,  South  America,  and  Africa  increased 
about  five-fold,  comparing  the  years  1914  and  1920.  Exports 
of  manufactures  increased  even  to  Europe,  including  such 
important  items  as  railroad  supplies,  agricultural  implements, 
machinery,  petroleum  products,  etc. ;  and  it  was  estimated  that 
in  1920  the  United  States  was  supplying  one-third  of  the  total 
demand  for  manufactured  wares  in  the  trade  of  the  world. 

777.  Effect  of  the  war  upon  the  import  trade.  —  The 
United  States  made  its  commercial  contribution  to  the  World 
War,  as  has  already  been  said,  by  following  a  course  which 
was  the  reverse  of  that  of  the  European  belligerents;  it  ex- 
panded its  exports,  and  restricted  its  imports.  Of  necessity 
it  renounced  a  very  large  part  of  that  trade  which  had  been 
the  greatest  source  of  supply,  the  trade  in  imports  from  Europe. 


THE   UNITED  STATES,   1914-1920  653 

Before  the  war  Europe  supplied  about  half  of  our  needs  (49 
per  cent  of  total  value  of  imports,  1913).  In  the  last  year  of 
the  war  imports  from  Europe  amounted  to  less  than  one- 
seventh  of  the  total  (14  per  cent  in  the  year  ending  June  30, 
1918).  The  varied  manufactures  which  we  had  been  used  to 
import  from  the  industrial  states  of  western  Europe  were  no 
longer  in  .the  market.  Many  of  these  wares  were  luxuries 
appealing  indeed  to  the  taste  of  the  consumer,  but  not  involv- 
ing any  serious  economic  consequences  when  the  supply  failed. 
Others,  notably  the  chemicals  and  the  special  kinds  of  glass 
and  porcelain  which  had  previously  been  imported  from 
Germany,  played  an  important  part  in  industrial  processes, 
and  had  if  possible  to  be  replaced.  American  manufacturers 
entered  a  field  which  the  Germans  had  long  regarded  as  their 
own  peculiar  province,  and  which,  indeed,  they  would  probably 
have  long  continued  to  dominate  if  they  had  not  broken  the 
peace. 

Forced  to  an  extension  and  diversification  of  industry  by 
the  demands  not  only  of  the  American  but  also  of  many  foreign 
consumers,  the  country  imported  an  increased  proportion  of 
crude  materials  for  use  in  manufacturing  as  the  proportion  of 
finished  manufactures  ready  for  consumption  declined.  Raw 
wool,  raw  silk,  crude  rubber  and  items  of  that  character  rose 
toward  the  top  of  the  list  of  wares  imported,  and  gave  a  new 
importance  to  the  trade  with  South  America  and  Asia. 

778.  The  excess  value  of  exports  over  imports.  —  The  war 
led,  for  reasons  already  given,  to  an  enormous  increase  in  the 
excess  value  of  exports  over  imports.  The  table  at  the  begin- 
ning of  the  chapter  presents  figures  which  were  without  parallel 
in  the  history  of  this,  or  indeed  of  any  other  country:  an  annual 
excess  in  the  years  1915-1920  averaging  over  3  milliard  dollars 
a  year,  a  total  excess  for  the  period  1914-1920  amounting  to 
18.5  milliards.  The  following  table  shows  how  unequal  was 
our  balance  in  trade  with  the  different  continents,  and  indicates 
the  close  connection  of  the  great  excess  of  exports  with  the 
European  war. 


654 


A  HISTORY  OF  COMMERCE 


BALANCE  OF  TRADE  IN  MERCHANDISE  OF  UNITED  STATES,  1913-1920 

(Calendar  years;  figures  in  millions  of  dollars,  giving  excess  value  of 
imports,  [-3,  or  of  exports,  [+],  of  the  U.  S.) 


Europe 

North 
America 

South 
America 

Asia 

Oceania 

Africa 

1913  

+635 

+211 

-  52 

-155 

+47 

+5 

1914  

+556 

+  40 

-139 

-168 

+29 

+6 

1915  

+2,027 

+  49 

-178 

-156 

+31 

+3 

1916  

+3,180 

+266 

-207 

-152 

+12 

-8 

1917  

+3,511 

+389 

-287 

-827 

+16 

-27 

1918  

+3,541 

+351 

-308 

-408 

-31 

-26 

1919  

+4,437 

+138 

-246 

-340 

+41 

-14 

1920  

+3,238 

+266 

-137 

-512 

+78 

+15 

Taking  Europe  alone  the  excess  of  exports  to  the  credit 
of  the  United  States  was  over  20  milliards  in  the  years  1914- 
1920.  North  America  was  the  only  other  continent  showing  a 
large  "favorable"  balance,  and  Canada  was  the  single  country 
that  accounted  for  most  of  this.  The  balance  in  trade  with 
South  America  and  with  Asia  was  against  the  United  States, 
as  had  been  usual  in  the  past,  but  to  an  extent  which  passed 
the  bounds  of  any  previous  experience. 

779.  Items  in  the  international  balance  before  the  war.  - 
In  approaching  the  subject  of  the  balance  of  trade  of  the 
United  States  during  the  war  it  is  desirable  to  have  in  mind  the 
most  important  items  which,  before  1914,  constituted  the  inter- 
national credits  and  debits  of  the  country.  The  table  below 
pictures  these  items  in  the  form  of  a  simple  balance  sheet,  as 
they  were  estimated  in  1910.*  The  figures  are  given  in  round 
sums,  indicating  that  they  make  no  pretence  to  statistical 
accuracy;  they  are  to  be  understood  merely  as  showing  the 
tendency  of  a  normal  year.  In  the  case  of  several  items  no 

*  I  have  adapted  the  figures  from  the  report  of  George  Paish  to  the 
National  Monetary  Commission,  61st  Congress,  2d  session,  Senate  Docu- 
ment No.  579,  pp.  153-213. 


THE   UNITED  STATES,   1914-1920 


655 


attempt  is  made  to  do  more  than  indicate  the  net  balance 
that  might  be  expected,  year  in  and  year  out. 

INTERNATIONAL  BALANCE  OP  THE  UNITED  STATES  BEFORE  THE  WAR 
(Figures  in  millions  of  dollars) 


Credit 

Debit 

Balance 

Credit 

Debit 

Merchandise     

2,000 

1,500 

200 
300 

500 

30 
40 

25 

150 
170 
225 

Bullion        

Freight,  etc  

Remittances  

Tourists    

30 

75 

Interest  and  dividends  

Investment  

570 

570 

780.  Explanation  of  the  "favorable"  balance.  —  The  most 
important  feature  of  the  table  is  the  great  credit  item  due  to 
the  excess  of  exports  over  imports.  Ever  since  1873,  with 
rare  exceptions  (only  four  years  altogether)  the  United  States 
has  shown  a  credit  balance  of  this  kind,  a  "favorable"  balance 
as  it  was  called  in  the  days  when  people  believed  that  it  would 
bring  precious  metals  into  the  country.  Actually,  the  "favor- 
able" balance  implied  nothing  more  than  that  we  were  a  debtor 
country,  bound  to  export  more  than  we  could  import  from  the 
rest  of  the  world,  to  meet  our  obligations.  The  character  of 
these  obligations  is  indicated  in  the  column  of  debit  balances. 
Foreigners  did  more  ocean  carriage  for  us  than  we  did  for  them, 
and  had  a  balance  due  to  them  on  that  account;  the  figure 
in  the  table  would  be  considerably  larger  if  the  freight  bill  had 
not  been  partially  offset  by  the  considerable  purchases  of  coal 
and  stores  made  by  foreign  ships  in  our  ports,  which  counted 
of  course  to  the  credit  of  the  United  States.  The  remittances 
of  private  persons,  largely  of  immigrants  to  this  country  sent 


656  A   HISTORY  OF  COMMERCE 

to  agents  or  relatives  in  their  old  home,  amounted  to  a  surpris- 
ingly large  aggregate.  Funds  would  be  remitted,  say,  by  a 
postal  money-order,  but  of  course  the  foreign  government 
that  honored  this  order  would  look  for  payment  to  the  American 
post-office,  which  would  have  to  depend  on  our  surplus  of 
exports  to  meet  the  debt.  So  in  the  case  of  the  other  items, 
expenses  of  American  travelers  and  the  claims  for  interest  and 
dividends  of  European  investors,  we  were  bound  to  make  heavy 
payments,  and  made  them  by  delivering  our  cotton,  copper, 
petroleum  products,  and  so  on,  to  a  value  much  exceeding 
the  value  of  our  imports. 

781.  Movement  of  specie  in  the  period  of  the  war.  —  Some 
part  of  the  total  exports  of  the  war  period  was  a  free  gift.  The 
food,  clothing,  and  medical  supplies  that  were  donated  by 
private  individuals,  by  associations,  and  by  the  government, 
demanded  no  commercial  return  and  no  acknowledgment  of 
indebtedness  from  the  foreigner.  Large  as  were  these  gifts  in 
absolute  value,  they  can  be  omitted  from  consideration;  they 
may  have  formed  a  considerable  portion  of  a  milliard  and  still 
be  negligible.  For  most  of  the  exports  that  appear  in  the 
commercial  returns  the  foreigner  had  to  pay  in  the  present  or 
promise  to  pay  in  the  future. 

One  means  of  payment  was  hard  cash.  In  the  few  years 
immediately  preceding  the  outbreak  of  the  war  the  European 
banks,  nervous  because  of  the  political  outlook,  had  been  trying 
to  build  up  their  reserves,  and  had  been  drawing  gold  from  the 
United  States.  In  the  single  month  of  July,  1914,  over  $40,- 
000,000  were  shipped  from  New  York.  American  bankers  and 
business  men  owed  at  this  time  several  hundred  million  dol- 
lars, maturing  before  the  end  of  1914;  the  city  of  New  York 
owed  $80,000,000.  For  a  brief  period  sterling  exchange  rose 
far  above  the  normal  par;  an  American  was  willing  to  pay 
over  $5  for  the  right  to  a  pound  sterling  payable  in  London. 
Soon  the  tide  set  in  the  other  direction.  The  total  gold  stock 
of  the  United  States  at  the  outbreak  of  the  war  was  about 
1.8  milliard  dollars.  In  1920  it  was  2.7  milliard,  roughly  one 


THE   UNITED  STATES,   1914-1920  657 

third  of  the  world's  total  stock  of  gold  used  for  monetary 
purposes.  In  the  interval  the  United  States  received  from 
Europe  over  1.2  milliard  dollars  in  gold,  of  which  it  kept  the 
larger  part. 

Reference  to  the  table  at  the  beginning  of  the  chapter  will 
show  that  silver  flowed  in  the  opposite  direction.  The  United 
States  as  a  silver-producing  country,  has  had  regularly  a  sur- 
plus to  export,  but  parted  with  the  very  large  sums  appearing 
in  the  table  in  the  years  1918-1919  as  a  means  of  liquidating 
part  of  the  balance  owed  to  Asia.  The  demand  for  silver  to 
be  shipped  to  the  East  was  so  strong  that  for  a  brief  period  the 
bullion  in  the  silver  dollar,  which  so  recently  as  1915  was  worth 
only  forty  cents,  was  actually  worth  more  than  a  dollar  in  gold. 

782.  Securities  and  loans.  —  Another  means  of  payment 
employed  by  the  peoples  of  Europe  to  meet  the  balance  against 
them  was  the  sale  in  the  United  States  of  American  securities 
owned  abroad.  It  is  supposed  that  in  the  period  1914-1920 
Americans  repurchased  4  to  5  milliards  in  value  of  stocks  and 
bonds  that  had  been  issued  in  the  United  States  and  held  by 
foreigners.  For  example,  of  the  common  stock  of  the  U.  S. 
Steel  Corporation  1,286,000  shares,  over  one-fourth  of  the 
total  issue,  were  in  1914  held  abroad.  At  the  end  of  1918  the 
number  had  dropped  to  484,000,  and  in  1919  it  declined  still 
further. 

American  investors,  furthermore,  purchased  several  mil- 
liard dollars  worth  of  foreign,  mainly  European  securities, 
issued  by  governments,  by  municipalities,  by  railroads,  and 
by  business  enterprises.  Evidently  the  European,  in  debt  to 
the  American  for  the  goods  sent  across  the  sea,  could  square 
the  account  by  selling  his  stocks  and  bonds  in  this  country 
and  paying  the  proceeds  to  his  creditor  here. 

Finally,  and  most  important,  the  American  government, 
after  the  entry  into  the  war  of  the  United  States  (April,  1917) 
took  upon  itself  the  task  of  financing  the  purchases  made  by 
associated  European  governments  in  this  country,  and  advanced 
to  them  a  sum  amounting  to  nearly  10  milliards  of  dollars. 


658  A   HISTORY  OF  COMMERCE 

In  July,  1921,  the  account  stood  as  follows,  including  only 
the  advances  made  under  the  Liberty  Loan  acts,  and  omitting 
considerable  sums  due  to  the  United  States  for  the  sale  of 
surplus  war  material  and  for  grain  supplied  to  impoverished 
districts. 

(Figures  in  millions  of  dollars.) 

United  Kingdom 4,166 

France 2,951 

Italy 1,648 

Belgium 348 

Total  of  these  items 9,113 

Total  including  items  omitted 9,435 

783.  Position  of  the  United  States  as  a  creditor  country.  — 
Although  it  is  not  possible  to  describe  with  perfect  precision 
the  process  by  which  the  European  peoples  arranged  to  pay 
for  the  excess  exports  of  the  United  States,  the  general  situation 
is  well  enough  known  to  warrant  one  conclusion  of  the  greatest 
significance.  The  process  resulted  in  turning  the  United  States 
from  a  debtor  country  to  a  creditor  country.  Even  if  we  dis- 
regard the  10  milliard  loans  made  by  the  American  government, 
and  take  account  only  of  the  investments  made  by  private 
citizens  in  this  country,  it  is  apparent  that  the  United  States 
at  the  close  of  the  war,  instead  of  owing  every  year  a  balance 
to  other  countries  on  account  of  interest  and  dividends,  was 
entitled  to  demand  such  a  balance  from  abroad.  So  many  items 
enter  into  the  general  international  balance  that  this  single  one 
cannot  be  taken  as  determining  the  outcome,  and  deciding  that 
after  the  war  there  would  be  in  normal  years  an  excess  of  im- 
ports over  exports.  The  country  will  doubtless  remain  a  debtor 
under  some  heads  (private  remittance,  tourists).  At  the  close 
of  the  war  it  certainly  was  not  collecting  interest  and  dividends 
in  the  form  of  an  excess  of  imports,  as  the  figures  show.  It 
continued  to  invest  capital  in  foreign  countries,  particularly 
in  Europe,  in  North  America,  and  in  South  America;  the 
capital  value  of  the  loans  far  exceeded  any  annual  interest 
charge  on  them.  Perhaps  this  process  will  continue  in  the 


THE   UNITED  STATES,   1914-1920  659 

period  of  reconstruction.  So  long  as  the  flow  of  capital  for 
investment  in  other  countries  exceeds  the  annual  charges  due 
from  them,  the  surplus  of  exports  (so  far  as  determined  by  this 
one  item)  will  continue.  It  is  reasonable  to  believe,  however, 
that  sooner  or  later  the  tide  will  turn,  and  the  United  States 
will  have,  year  in  and  year  out,  a  surplus  of  imports  over  exports. 
The  change  will  require  a  readjustment  of  ideas  that  have 
been  fixed  by  generations  of  habit.  Investors,  demanding  in- 
terest payments  from  foreign  debtors,  will  no  longer  be  able 
to  maintain  the  attitude  that  imports  menace  the  prosperity 
of  the  country  and  should  be  cut  down  by  the  restrictions  of 
the  tariff.  Exporters  will  find  that  the  current  is  set  against 
them,  and  that  they  can  broaden  their  market  only  as  they 
stimulate  still  greater  growth  in  the  import  trade.  The  Ameri- 
can people  will  realize  at  last  that,  without  a  conscious  exercise 
of  their  will,  they  have  become  a  " world-power,"  and  that  in 
their  own  interest,  quite  apart  from  humanitarian  motives, 
they  must  accept  new  responsibilities  and  take  an  active  part 
in  international  affairs. 

784.  Shipbuilding  before  the  war.  An  excess  of  imports 
into  the  United  States,  over  the  exports  from  this  country, 
will  come  sooner  and  will  be  larger  if  the  country  resumes  an 
important  position  in  ocean  shipping,  as  some  believe  it  will. 
The  United  States  continued,  before  the  World  War,  to  build 
shipping  in  considerable  volume.  The  statistics  of  Lloyds 
Register  show  that  in  the  first  decade  of  the  twentieth  century, 
American  shipyards  contributed  about  one-seventh  of  the  total 
tonnage  built  in  the  world.  Most  of  the  vessels  built,  however, 
were  destined  for  service  on  the  Great  Lakes  or  in  the  coasting 
trade;  the  tonnage  of  steamers  built  for  the  foreign  carrying 
trade  was  relatively  unimportant.  Foreign  ships  carried 
regularly  about  nine-tenths  of  our  sea-borne  trade  in  mer- 
chandise. 

785.  Shipbuilding  by  the  American  government.  —  In  the 
first  year  of  the  war  the. tonnage  of  ships  built  actually  declined. 
The  provision  of  adequate  cargo  space  became,  however,  a 


660 


A   HISTORY  OF   COMMERCE 


matter  of  urgent  importance,  as  ships  were  drawn  into  service 
as  transports  and  the  ravages  of  the  submarine  extended.  The 
government  established  in  1916  a  Shipping  Board,  for  the  con- 
struction of  ships  as  a  public  enterprise,  and  when  it  entered 
the  war  in  1917  it  proposed  to  make  one  of  its  most  important 
contributions  to  the  war  by  the  supply  of  new  tonnage.  The 
results  are  presented  in  the  statistics  of  the  accompanying 
table. 

VESSELS  BUILT  IN  THE  UNITED  STATES,  1914-1920 
(Figures  in  thousands  of  gross  tons;  fiscal  years  ending  June  thirtieth.) 


Sailing 

Steam 

Total* 

1914  

14 

224 

316 

1915  

8 

142 

225 

1916    

15 

238 

325 

1917  

43 

461 

664 

1918  

84 

1,000 

1,301 

1919  

79 

3,107 

3,327 

1920  

132 

3,603 

3,881 

*  Figures  of  total  tonnage  include    gas   vessels,   canal    boats   and 
barges,  not  separately  enumerated  in  the  table. 

786.  American  shipping  at  the  close  of  the  war  —  Compar- 
ing the  figures  of  the  table  with  the  years  of  the  war  (and  noting 
that  each  year  of  the  table  ends  June  30,  not  Dec.  31)  it  is 
apparent  that  the  contributions  of  the  United  States  to  relieve 
the  dearth  of  shipping  were  of  real  importance  in  the  last  year 
of  the  war,  but  that  the  new  industry  developed  slowly  and 
reached  its  maximum  of  output  only  after  peace  had  been  de- 
clared. The  peak  of  monthly  production  was  attained  in 
August,  1919,  when  about  400,000  tons  of  sea-going  steel 
steamers  were  constructed.  The  sudden  expansion  of  the  in- 
dustry, demanding  the  training  of  nearly  a  million  men  called 
from  other  occupations,  was  necessarily  expensive.  In  three 
years,  ending  in  1920,  the  Shipping  Board  expended  about  3 


THE   UNITED  STATES,   1914-1920 


661 


milliard  dollars,  a  sum  greater  than  the  book  value  of  the 
total  shipping  of  the  world  in  1914.  As  a  result  of  its  activity 
the  government  owned  about  8  million  tons  of  ocean  shipping. 
In  the  period  of  depression  which  followed  the  war  fully  half 
of  this  amount  was  idle,  and  the  operation  of  ships  by  the 
government  proved  to  be  a  losing  venture.  An  act  of  1920 
directed  that  the  ships  be  sold  to  private  owners,  but  the  close 
of  the  period  left  their  future  still  in  doubt. 

787.  Foreign  exchange  at  the  close  of  the  war.  —  To 
understand  the  commercial  position  of  the  United  States  at 
the  close  of  the  war  it  is  necessary  to  return  again  to  questions 
of  currency  and  foreign  exchange.  The  situation  appears  in 
the  following  table. 

AVERAGE  ANNUAL  RATE  OF  EXCHANGE  IN  NEW  YORK 


1913 

1919 

1920 

On  London        

100 

90 

75 

On  Paris    

100 

71 

36 

On  Rome  

100 

56 

26 

On  Berlin  

100 

7 

7 

The  table  signifies,  for  example,  that  the  Ajnerican  in 
New  York  could  buy  in  1919  for  $90  or  in  1920  for  $75  as  many 
pounds  sterling  as  had  cost  him  $100  before  the  war;  that  he 
could  pay  a  debt  at  Rome  with  half  as  many  dollars  in  1919, 
with  a  quarter  as  many  dollars  in  1920,  as  he  would  have  had 
to  pay  in  1913.  During  the  war  the  rate  of  exchange,  like  many 
other  prices,  was  subject  to  government  control;  the  figures 
for  1919  and  1920  show  the  tendency  of  the  rates  when  they 
were  left  free  to  represent  the  actual  value  of  the  different 
currencies  in  international  transactions. 

788.  Effect  of  depreciation  in  stimulating  exports.  —  The 
table  shows  a  great  depreciation  of  the  European  currencies 
compared  with  the  American.  The  United  States  had  had  a 


662  A  HISTORY  OF  COMMERCE 

great  expansion  of  bank  credit  during  and  after  the  war,  but, 
after  all,  had  in  its  enormous  stock  of  gold  the  means  to  maintain 
the  dollar  on  a  gold  basis,  while  the  European  countries  had 
in  circulation  varying  amounts  of  irredeemable  paper.  The 
reactions  of  this  situation  on  international  transactions  were 
manifold,  but  two  of  them  are  worth  particular  attention. 

When  the  issue  of  paper  money  continued,  as  in  Germany 
for  example,  the  value  of  the  mark  in  foreign  exchange  fell 
more  sharply  than  its  purchasing  power  in  the  home  market. 
An  American  importer  would  be  able  to  buy  more  marks  for 
the  dollar.  The  mark  would  not  buy  as  much  as  before  in 
Germany,  but  the  dollar's  worth  of  marks  would  buy  more 
than  before;  and  the  importer  would  find  a  transaction  pro- 
fitable which  previously  he  would  have  been  unable  to  under- 
take. Unequal  depreciation  of  this  kind  acted  as  a  stimulus 
or  premium  on  exports  from  Germany,  which  was  seriously 
felt  by  competing  producers  in  other  countries. 

789.  Effect  upon  the  international  money  market.  —  The 
situation  had  also  an  important  effect  on  the  course  of  inter- 
national loans.  Let  us  assume  for  example  the  case  of  Brazil, 
desiring  to  place  a  loan  abroad.  If  it  borrowed  in  New  York 
it  would  get  gold  dollars  and  would  feel  assured  that  when  it 
came  to  repay  the  loan  it  would  repay  it  in  the  same  currency, 
with  units  of  approximately  equal  value.  If,  on  the  other 
hand,  it  borrowed  in  London,  in  terms  of  pounds  sterling,  it 
would  get  paper  pounds,  at  a  discount  in  comparison  with 
gold,  but  must  look  forward  to  repaying  the  loan  with  gold 
units  if  in  the  interval  the  English  had  succeeded  in  putting 
their  currency  on  a  gold  basis  and  thereby  bringing  their 
exchange  to  par.  Even  if  Brazil  desired  to  make  the  loan  for 
financing  some  expenditure  in  the  European  market  it  would 
do  better  to  buy  dollar  credit  in  the  first  instance,  and  buy 
with  that  the  foreign  currency  that  it  needed;  and  to  accomplish 
this  end  it  would  be  willing  to  pay  higher  rates  in  New  York 
than  in  London.  It  would  be  hazardous  to  assert  that  as  a 
result  of  the  war  New  York  will  replace  London  as  the  world's 


THE   UNITED  STATES,  1914-1920  663 

money  market,  but  it  is  clear  that  the  position  of  London  is 
seriously  prejudiced  so  long  as  English  currency  is  at  a  discount 
in  comparison  with  gold. 

QUESTIONS  AND  TOPICS 

1.  Chart  the  statistics  of  trade  as  in  previous  exercises. 

2.  Divide  the  figures  of  imports  and  exports  by  the  figure  fop  the 
price  level  of  the  year  (1.01,  1.24,  etc.,),  so  reducing  values  to  the  level 
of  1914,  and  enter  results  on  chart  with  a  dotted  line  that  gives  approxi- 
mately volume  of  imports  and  exports. 

3.  What  was  the  relative  importance  of  foreign  and  of  domestic 
trade  in  the  United  States  in  this  period?    [B.  M.  Anderson,  in  Annalist 
of  N.  Y.  Times,  Jan.  3,  1921,  17:9.] 

4.  What  exports  of  the  United  States,  (a)  increased  most  in  value, 
(fc)  increased  most  in  quantity,  in  this  period?     [Statistical  Abstract, 
1920,  Table  of  domestic  exports,  quantities  and  values,  by  years  1911- 
1920.] 

5.  What  exports  declined  in  quantity  and  in  value?    [Same]. 

6.  Compare  the  exports  from  the  United  States  to  a  particular  country 
at  the  beginning  and  at  the  end  of  the  war.    [Use  Bureau  of  Foreign  and 
Domestic  Commerce,  Misc.  Series,  no.  38  and  no.  106,  Trade  of  U.  S. 
with  the  world,  1914-15  and  1918-19.    The  student  may,  for  example, 
take  Argentina,  Chile,  Japan,  or  British  India,.] 

7.  Using  sources  given  above,  report  upon  the  history  of  a  particular 
import,  or  on  the  imports  from  a  particular  country,  during  the  war. 

8.  How  the  dyestuffs  crisis  was  met.     [E.  Hendrick  in  American 
World's  Work,  March,  1918,  35:    531-535.] 

9.  The  problem  of  potash  and  nitrates.    [F.  P.  Stockbridge  in  Ameri- 
can World's  Work,  May,  June,  1918,  36:   28-34,  191-197.] 

10.  The  balance  of  international  payments.    [F.  W.  Taussig,  Prin- 
ciples of  Economics,  vol.  1,  chap.  33.] 

11.  The  trade  balance  of  the  U.  S.  before  the  war.    [G.  Paish,  refer- 
ence in  note  to  sect.  779.] 

12.  Probable  tendencies  in  the  trade  balance  of  the  U.'S.  [J.  R.  Smith, 
The  American  trade  balance,  National  Foreign  Trade  Council,  N.  Y., 
1919.] 

13.  Function  of  imports  in  our  foreign  trade.    [G.  E.  Roberts,  National 
City  Bank,  Foreign  Commerce  Series,  no.  2,  N.  Y.,  1920.] 

14.  American   loans  to  Europe.     [Noyes   in   Scribners'   Magazine, 
61:   131  ff.;  Atwood  in  American  World's  Work,  33:  243-250,  399-403.] 

15.  Application  of  American  methods  to  the  construction  of  ships. 
[Hurley,  chap.  5,  8.] 


664  A  HISTORY  OF  COMMERCE 

16.  Concrete  ships.     [Mattox,  chap.  13.] 

17.  Development  of  shipyards.     [Hurley,  chap.  6;    Mattox,  chap. 
15.] 

18.  The  shipping  problem  at  the  close  of  the  war.    [E.  R.  Johnson 
in  Friedman,  chap.  13.] 

19.  Foreign  investments.     [F.  H.  Sisson  in  Friedman,  chap.  19.] 


BIBLIOGRAPHY 

In  addition  to  sources  previously  cited  see  the  Miscellaneous  Series 
of  the  Bureau  of  Foreign  and  Domestic  Commerce,  numbers  15,  38,  63, 
78,  106,  etc.,  giving  details  of  foreign  trade  by  countries.  On  the  subject 
of  gold  movement,  foreign  exchange  and  international  finance  reference 
must  be  made  to  reports  of  the  Secretary  of  the  Treasury,  Director  of  the 
Mint,  and  Bulletins  of  the  Federal  Reserve  Board.  References  given 
under  chapter  54  are  also  applicable  here.  A  monograph  on  Depreciated 
exchange  and  international  trade  was  issued  by  the  U.  S.  Tariff  Commission, 
Washington,  1922. 

The  student  should  relate  the  history  of  commerce  during  the  war  to 
the  military  and  political  history  of  the  period,  and  should  have  in  mind 
the  narrative  as  presented  in  general  accounts  such  as  those  by  Charles 
Seymour,  **  Woodrow  Wilson,  1921;  J.  S.  Bassett,  •**  Our  war  with 
Germany,  1919;  J.  B.  McMaster,  *  The  U.  S.  in  the  World  War,  1918; 
F.  L.  Paxson,  *  Recent  history  of  U.  S.,  1921,  chap.  44-56. 

The  most  complete  account  of  industrial  and  commercial  activity 
organized  for  the  conduct  of  war  will  be  found  in  Benedict  Crowell  and 
R.  F.  Wilson,  **  How  America  went  to  war,  New  Haven,  Yale  University 
Press,  1921,  6  vols.:  The  giant  hand  (mobilization  and  control  of  industry 
and  natural  resources);  The  road  to  France,  2  vols.;  The  armies  of  in- 
dustry, 2  vols.;  Demobilization.  The  subject  of  shipping  is  covered  by 
E.  N.  Hurley,  *  The  new  merchant  marine,  N.  Y.,  1920,  and  W.  C.  Mattox, 
Building  the  emergency  fleet,  Cleveland,  1920.  On  the  various  problems 
of  reconstruction  see  the  symposium  edited  by  E.  M.  Friedman,  American 
problems  of  reconstruction,  N.  Y.,  1918,  and  Isaac  Lippincott,  Problems 
of  reconstruction,  N.  Y.,  1919.  Many  special  topics  of  commerce,  in- 
dustry and  finance  are  treated  in  periodicals,  in  reports  of  banks  (e.g.,  For- 
eign commerce  series  of  National  City  Bank)  and  in  government  reports 
(e.g.,  dyestuffs  in  Bureau  of  For.  and  Dom.  Commerce,  Special  Agents 
Series,  numbers  96,  11,  and  121). 


TITLES  OF  BOOKS  CITED  BY  ABBREVIATIONS      665 


TITLES   OF  BOOKS   CITED   BY  ABBREVIATIONS 

NOTE.  —  Books  of  which  the  full  titles  have  already  been  given  are 
not,  in  most  cases,  included  in  the  following  list,  which  is  supplementary 
to  the  bibliographies  and  by  no  means  a  substitute  for  them.  The  list 
includes  only  titles  of  those  books  which  have  been  cited  so  many  times 
that  a  repetition  of  the  full  title  would  waste  space,  and  which  have  been 
cited  in  so  many  different  places  that  the  reader's  time  would  be  wasted 
in  hunting  for  the  entry  of  the  full  title.  I  have  thought  it  unnecessary 
to  give  full  titles  of  standard  narrative  histories,  of  current  manuals  in 
the  allied  subjects  of  history  and  economics,  and  of  local  sources  in  the 
history  of  the  United  States. 

Adams,  Charles  F.,  Jr.  Railroads,  their  origin  and  problems.     N.  Y., 

no  date. 
Adams,  George  B.  Civilization  during  the  Middle  Ages.     N.  Y.,  Scrib- 

ner,  1894. 
A.  L.  A.  (American  Library  Association)  Catalogue.    Washington,  1904, 

and  later  editions. 

American  railway,  The.    N.  Y.,  Scribner,  1897. 
&.rmitage-Smith,  G.  The  free-trade  movement.     London,  1898. 
Ashley,  William  J.,  editor.     British  industries.     London  (N.  Y.,  Long- 
mans), 1903. 
Ashley,  William  J.    English  economic  history.    N.  Y.,  Longmans,  1892-3, 

2  vol. 

Ashley,  William  J.    The  Tariff  problem.    London,  1903. 
Baring-Gould,  Sabine.    Story  of  Germany.    N.  Y.,  Putnam,  1886. 
Bastable,  C.  F.    Commerce  of  nations.    N.  Y.,  Scribner,  1899. 
Beazley,  C.  R.     Prince  Henry  the  Navigator.     N.  Y.,  Putnam,  1895. 
Beer,  George  L.     Commercial  policy  of  England  toward  the  American 

colonies.    N.  Y.,  Macmillan,  1893,  Columbia  Studies,  3,  II. 
Beer,  G.  L.    The  old  colonial  system,  1660-1774.    N.  Y.,  1912,  2  vol. 
Bishop,  J.  Leander.    History  of  American  manufactures.     Philadelphia, 

1861-68.     3  vol. 

Bourne,  Edward  G.    Spain  in  America.    N.  Y.,  Harper,  1904. 
Bourne,  H.  R.  Fox.    Romance  of  Trade.    London,  no  date. 
Bowker,  R.  R.  and  George  lies.    Reader's  guide  in  economic,  social,  and 

political  science.     N.  Y.,  Putnam,  1891. 
Bowley,  Arthur  L.    England's  foreign  trade  in  the  nineteenth  century. 

London  (N.  Y.,  Scribner),  1893. 


666  A  HISTORY  OF  COMMERCE 

Bowman,    Isaiah.     The   new  world,   problems   in   political   geography. 

Yonkers-on-Hudson,  1921. 
Bruce,   Philip  A.     Economic  history  of  Virginia.     N.  Y.,   Macmillan, 

1896,  2  vol. 

Biicher,  Carl.     Industrial  evolution.     N.  Y.,  Holt,   1901. 

Callender,  G.  S.     Early  transportation  and  banking  enterprises  of  the 

States.    Quarterly  Journal  of  Economics,  Boston,  1902-3,  17:    111- 

162. 

Cambridge  Modern  history.     N.  Y.,  Macmillan,  1902  ff. 
Carnegie  History  of  domestic  and  foreign  commerce  of  the  United  States, 

by  Emory  R.  Johnson,  T.  W.  Van  Metre,  G.  G.  Huebner,  and  D.  S. 

Hanchett.     Washington,  1915,  2  vol. 
Chapman,  S.  J.    History  of  trade  between  United  Kingdom  and  U.  S., 

London  (N.  Y.,  Scribner),  1899. 
Chapman,  Sydney  J.    Work  and  wages.    London,  Longmans,  1904-1914. 

3vol. 
Cheyney,  Edward  P.    European  background  of  American  history.    N.  Y., 

Harper,  1904. 
Clapham,  J.  H.     The  economic  development  of  France  and  Germany, 

1815-1914.    Cambridge,  1921. 
Coman,  Katharine.     Industrial  history  of  the  U.  S.    N.  Y.,  Macmillan, 

1910. 

Cornewall-Jones,  R.  J.     British  merchant  service.     London,  1898,  14s. 
Cunningham,   William.     Growth   of   English   industry   and   commerce. 

Cambridge  (N.  Y.,  Macmillan),  1896-1903,  2  vol.  in  3. 
Cunningham,  William.     Rise  and  decline  of  the  free-trade  movement. 

London,  1904. 
DeBow,  J.  D.  B.    Industrial  resources  of  the  southern  and  western  States. 

New  Orleans,  1853,  3  vol. 

Depew,  Chauncey  M.,  editor.     One  hundred  years  of  American  com- 
merce.   N.  Y.,  1895,  2  vol. 

Edgar,  William  C.    Story  of  a  grain  of  wheat.    N.  Y.,  Appleton,  1903. 
Fairlie,  J.  A.    Economic  effects  of  ship  canals.    Annals  of  Amer.  Acad., 

Philadelphia,  1898,  11:    54-75. 
Fisher,  Sydney  G.    Men,  women  and  manners  in  colonial  times.    Phila., 

1898,  2  vol. 

Fry,  Henry.    History  of  North  Atlantic  steam  navigation.    N.  Y.,  Scrib- 
ner, 1896. 

Gastrell  W.  S.  H.    Our  trade  in  the  world.     London,  1897. 
Green,  Mrs.  J.  R.    Town  life  in  the  fifteenth  century.    N.  Y.,  Macmillan. 

1894,  2  vol. 

Hadley,  Arthur  T.    Railroad  transportation.     N.  Y.,  Putnam,  1903. 
Hammond,  Matthew  B.    The  cotton  industry.   Pub.  Amer.  Econ.  Assoc., 

1897,  2  series,  no.  1.     N.  Y.,  Macmillan. 


TITLES  OF  BOOKS  CITED  BY  ABBREVIATIONS      667 

Hatfield,  Henry  R.,  editor.     Lectures  on  commerce.     Chicago,  1904. 
Hewins,  W.  A.  S.    English  trade  and  finance.    London  (N.  Y.,  Scribner), 

1892. 
Hobson,  John  A.     Evolution  of  modern  capitalism.     N.  Y.,  Scribner, 

new  ed.,  1916. 
Romans,  J.  Smith,  editor.     Cyclopedia  of  commerce.     N.  Y.,  Harper, 

1858. 
Hulbert,  Archer  B.    Historic  highways  of  America.    Cleveland,  1902-5, 

16  vol. 

Hunter,  William  W.    History  of  British  India.     London  (N.  Y.,  Long- 
mans), 1899,  2  vol. 
James,  Edmund  J.    The  canal  and  the  railway.    Pub.  Amer.  Econ.  Assoc., 

1890,  5:282-329. 
Jeans,  J.  S.    Waterways  and  water  transport.     London  (N.  Y.,  Spon), 

1890. 
Jessopp,  Augustus.     Coming  of  the  friars.     London,  (N.  Y.,  Putnam), 

1889. 

Jevons,  W.  S.    The  coal  question.    London,  2  ed.,  1866. 
Johnson,  Emory  R.    American  railway  transportation.    N.  Y.,  Appleton, 

1903  and  later  editions. 

Jusserand,  J.  J.    English  wayfaring  life.    N.  Y.,  Putnam,  1890. 
Keller,  Albert  G.    Colonization.    Boston,  1908. 
Lectures  on  British  commerce,  with  preface  by  W.  P.  Reeves.    London, 

1912. 
Levi,  Leone.    History  of  British  commerce,  1763-1878.    2  ed.,  London, 

1880. 

Lindsay,  W.  S.     History  of  merchant  shipping.     London,  1876,  4  vol. 
.Lippincott,  Isaac.    Economic  development  of  the  United  States.    N.  Y., 

1921. 
Lord,  Eleanor  L.    Industrial  experiments  in  the  British  colonies.    Bryn 

Mawr  dissertation,  1896. 
McCarthy,  Justin.     History  of  our  own  times.     N.  Y.,  Harper,  1901, 

3  vol.  and  various  other  editions. 

M'Culloch,  J.  R.     Dictionary  of  commerce.     Philadelphia,  1847,  2  vol. 
Macgregor,  John.     Commercial  statistics.     2  ed.,  London,  1850,  5  vol. 
Macpherson,  David.    Annals  of  commerce.    London,  1805,  4  vol. 
Maginnis,  A.  J.    The  Atlantic  ferry.    N.  Y.,  Macmillan,  1900. 
Mahan,  A.  T.     Influence  of  sea  power  upon  history.     Boston,  Little, 

1893. 

Marvin,  Winthrop  L.    The  American  merchant  marine.     N.  Y.,  Scrib- 
ner, 1902. 
Mayo-Smith,  Richmond,  and  E.  R.  A.  Seligman.    Commercial  policy  of 

the  U.  S.,  1860-90.    Leipzig,  1892,  Schriften  Ver.  f.  Soc.,  XLIX. 


668  A  HISTORY  OF  COMMERCE 

Mongredien,  Augustus.   History  of  the  free-trade  movement  in  England. 

London,  Cassell,  no  date. 
Morley,  John.     Life  of  Richard  Cobden.     London  (N.  Y.,  Macmillan), 

1881,  2  vol. 

Nicholson,  J.  S.    History  of  the  English  corn  laws.    London,  1904. 
Nicolls,  W.  J.    Story  of  American  coals.    2  ed.,  Philadelphia,  Lippincott, 

1904. 

Ocean  steamships.     N.  Y.,  Scribner,  1891. 
Ogg,  Frederic  A.     Economic  development  of  modern  Europe.     N.  Y.r 

1917. 

Oxley,  J.  M.    Romance  of  commerce.    N.  Y.,  Crowell,  1897. 
Page,  T.  W.     Earlier  commercial  policy  of  the  U.  S.     Journal  of  Pol. 

Econ.,  Chicago,  1901-2,  10:161-192. 
Palgrave,  R.  H.  I.     Dictionary  of  political  economy.     London  (N.  Y., 

Macmillan),  1894-99,  3  vol. 
Porter,  G.  R.    Progress  of  the  nation.    London,  1836  ff.,  3  vol.;  new  ed., 

London,   1912. 
Rand,  Benjamin.    Selections  illustrating  economic  history,  4  ed.,  N.  Y., 

Macmillan,  1903. 
Report  of  a  Committee  of  the  Lords  of  the  Privy  Council  on  the  trade 

of  Great  Britain  with  the  U.  S.,  1791.    Reprinted,  Washington,  1888. 
Ringwalt,  J.  L.     Development  of  transportation  systems  in  the  U.  S. 

Philadelphia,  1888. 

Schmoller,  Gustav.    The  mercantile  system.    N.  Y.,  Macmillan,  1902. 
Schooling,  J.  H.    The  British  trade  book.    London,  4th  issue,  1911. 
Seebohm,  Frederic.    Era  of  the  Protestant  Revolution.   N.  Y.,  Longmans, 

1903. 

Seeley,  J.  B.     Expansion  of  England.     Boston,  Little,  1900. 
Seignobos,   Charles.     Political  history  of  Europe  since   1814.     N.  Y., 

Holt,  1899. 

Seybert,  Adam.     Statistical  annals.     Philadelphia,  1818. 
Shadwell,  Arthur.    Industrial  efficiency.    London,  1906,  2  vol.;    new  edi- 
tion, 1  vol.,  1909. 
Social  England,  ed.  by  H.  D.  Traill  and  J.  S.  Mann.    London  (N.  Y., 

Putnam),  1894  ff.,  1901  ff.,  6  vol. 
Spears,  John  R.    The  story  of  the  American  merchant  marine.    N.  Y., 

1910,  new  ed.,  1917. 

Statesman's  Year-Book.    London  (N.  Y.,  Macmillan),  annual. 
Stephens,  H.  M.    Story  of  Portugal.    N.  Y.,  Putnam,  1891. 
Swank,  J.  M.    History  of  the  manufacture  of  iron.    2  ed.,  Philadelphia, 

1892. 

Taussig,  Frank  W.    Tariff  history  of  the  U.  S.     N.  Y.,  Putnam,  1897. 
Vernon-Harcourt,  L.  F.     Achievements  in  engineering.     N.  Y.,  Scrib- 
ner, 1891. 


TITLES  OF  BOOKS  CITED  BY  ABBREVIATIONS      669 

Ward,  T.  H.     editor,  Reign  of  Queen  Victoria.     London,  1887,  2  vol. 

Waterston,  William.    Cyclopedia  of  commerce.    London,  1847. 

Weeden,  W.  B.    Economic  and  social  history  of  New  England.    Boston, 

Houghton,  1890,  2  vol. 

Wells,  David  A.    Our  merchant  marine.    N.  Y.,  Putnam,  1890. 
Wells,  David  A.     Recent  economic  changes.     N.  Y.,  Appleton,  1898. 
Williams,  Ernest  E.     "Made  in  Germany,"  5  ed.,  London,  1897. 
Wilson,  A.  J.     Resources  of  modern  countries.     London,   1878,  2  vol. 
Wright,  Carroll  D.      Industrial  evolution  of  the  U.S.    N.  Y.,  Scribner, 

1895. 
Zimniern,  Helen.    The  Hansa  towns.     N.Y.,  Putnam,  1889. 


INDEX 


Aegina,  19. 

Africa,    circumnavigation    of,    10, 

130; 

commerce  with  England,  221 ; 
with   the   United  States,  491, 

586,  651. 
Agriculture,  medieval,  35;  modern, 

139;  recent,  280. 
Agricultural  implements,  569. 
Alexander  the  Great,  10,  11,  21. 
Alexandria,  22,  27. 
Alum,  82. 
Amber,  103. 
America,  discovery  of,  133. 

Spanish,   180-184. 
Amsterdam,    159,    194. 
Antioch,  22,  27. 
Antwerp,  74,  109,  154,  434. 
Archangel,  267,  456. 
Arkwright,  214. 
Asia,  in   Middle  Ages,   128.     See 

also    China,    India,    Japan, 

Levant. 

Assize  of  bread,  51. 
Assyria,   11. 
Athens,   19  ff. 
Australia,  commerce  with  England, 

361. 

Austria-Hungary,  modern,  259;  re- 
cent, 436,  639  ff .,  and  Prussia, 

396. 
Austria,  Republic,  641. 

Babylon,  11. 

Bagdad,  84. 

Balboa,  133. 

Balkan  Peninsula,  465. 

Baltio    trade,    medieval,    102  ff.; 

modern,  252;  recent,  350. 
Baltimore,  489,  548,  585. 
Banking,   early,   120,   150;   recent, 

339. 


Barcelona,   99. 

Belgium,  433.    See  also  Flanders, 

Netherland. 
Bessemer,  285. 
Bill  of  exchange,  120. 
Bismarck,  406. 
Bodeck,  John  von,  142. 
Bolsheviks  in  Russia,  644. 
Bordeaux,   74. 
Boston,  489,  490,  548,  585. 
Brazil,   185_. 
Bremen,  257. 

British  Dyes,  limited,  615. 
British  North  America,  221. 
British  Trade  Corporation,  616. 
Bruges,  75,  97,  105,  109,  115. 
Bulgaria,  465. 
Bullionist  policy,  167. 

Cable,  submarine,  313. 

Cadiz,  14. 

Cabral,  133. 

Canada,  commerce  with  United 
States,  549,  589,  651.  See 
also,  England,  colonists. 

Canals,     211,     292  ff.       See     also 

United  States,  waterways. 
Ship,  307. 

Caprivi,  418. 

Carthage,  14,  22,  27. 

Cartwright,  214. 

Cavour,  443. 

"Central  Europe,"  419. 

Chamberlain,  Joseph,  392,  394. 

Champagne,  Fairs  of,  65  ff . 

Charlemagne,  29,  57. 

Charleston,  489,  548. 

Chemical  industry,  286. 

China,  commerce  with  England, 
363;  with  Russia,  268;  with 
United  States,  491,  495,  550, 
589. 


671 


672 


INDEX 


Coal,  274  ff.,  319. 

and  iron,  215,  275. 

in  England,  359,  386;  in  United 

States,  542,  560. 
Cobden,  Richard,  372,  425. 
Coeur,  Jacques,  232. 
Colbert,  242,  246. 

Colonial  policy,  modern,  171;  re- 
cent, 354. 

of     England,     226,     395;     of 
France,  234,  236;   of  Spain, 
180,  183. 
Colonies,     see     under     name     of 

mother  country. 
Columbus,  133. 
Commenda,  116. 

Commerce,  ancient,  9-29;  early 
medieval,  36;  late  medie- 
val, 44;  modern,  128;  re- 
cent, 270;  and  World  War, 
593. 

general,    1. 
obstacles  to,  2. 
political  conditions,  4,  31,  123, 

161. 

qualities  of  contemporary,  329. 
risks  of,  3. 

statistics,  recent,  271,  273,  396. 
Commercial    organization,    medie- 
val, 115ff.;   modern,  141  ff.; 
recent,  392  ff . 

Commercial  policy,  manorial,  35; 
municipal,  50;  national,  126; 
recent,  345  ff .    See  also  under 
name  of  country. 
Companies,  medieval,   115;   mod- 
ern, 144. 
In  England,  202  ff.;  in  France, 

234. 

joint  stock,  146 ff. 
regulated,   145. 
Compass,  mariners',  73. 
Constantinople,  29,  86,  87,  90,  92. 
Continental  system,  346  ff. 
Copper  in  the  United  States,  575. 
Corinth,  19,  22. 
Corn,  see  grain,  wheat. 
Corn    (maize),   in   United   States, 

471,  472,  570. 

Corn  laws,  English,  371,  372. 
Cort,  Henry,  215. 
Cotton,  82,  323. 

in  United  States,  503,  531,  566, 
572. 


manufacture,  in  England,  214 

360;  in  United  States,  543. 
Crimean  War,  456. 
Crises,   commercial,  modern,   158; 

recent,  339  ff. 
Crusades,  86  ff . 
Cumberland  road,  515. 
Currency,  in  Middle  Ages,  118. 

and  prices  after  1500,  135. 

in  World  War,  600. 
Czecho-Slovakia,  640. 

Damascus,  84. 
Denmark,  438. 

commerce    with    Germany    in 

World  War,  636. 
Drugs  in  Levant  trade,  80. 
Dyestuffs,  81,  287. 

East  India  Company,  Dutch,  192, 
196. 

English,  204,  220. 
Egypt,  9,  85,  612  note. 
Embargo  in  United  States,  507. 
Engine,  internal  combustion,  277. 

See  also  steam. 

England,  medieval,  109  ff . ;  modern, 
199  ff.;  recent,  357  ff.;  in 
World  War,  607  ff. 

agriculture,  modern,  210;  re- 
cent, 371;  in  World  War, 
614. 

balance  of  trade,  380. 

colonial  policy,  modern,  226; 
recent,  395. 

colonies,  modern,  220;  recent, 
364. 

commercial  policy,  modern, 
224;  recent,  368 ff.;  about 
1900,  393 ff.;  in  World  War, 
618  ff. 

exports,  modern,  209;  recent, 
358 ff.;  1850,  378;  1900,  386; 
in  World  War,  611  ff. 

imports,  modern,  219 ff.;  re- 
cent, 361;  1850,  379;  1900, 
386;  in  World  War,  609  ff. 

internal  trade,  210. 

labor  in  World  War,  617. 

manufactures,  modern,  210; 
recent,  359  ff.,  389;  in  World 
War,  615. 

mercantile  organization,  390, 
616. 


INDEX 


673 


political  development,  199,  212, 
372. 

ports,  modern,  202;  recent, 
224;  1850,382. 

shipping,  medieval,  110;  mod- 
ern, 222;  recent,  374;  1850, 
381 ;  in  World  War,  599. 

statistics,  1700-1800,  205,  206; 
1801-1850,  358;  1850-1913, 
377 ;  1913-1919,  607. 

and    the    United    States,   362, 

383;  policy,  1789,  499. 
Erie  canal,  519,  557. 
Evans,  295. 

Exchange,  produce,  modern,  154  ff.; 
recent,  337. 

stock,  156. 

Factors,  142. 

Fairs,    medieval,    163 ff.;    decline, 

337. 
Feudalism,  32,  56. 

decline  of  123,  161. 
Fish,  in  Baltic  commerce,  103,  252. 

in  United  States,  471,  476. 
Fiume,  261,  640. 
Flanders,  97,  109. 
Flanders  galleys,  97. 
Florence,  98  ff.,  265. 
Fondaco  dei  Tedeschi,  95. 
Foreign  exchange,  603  ff.,  651. 
France,       modern,       229  ff. ;       in 
Napoleonic    wars,    348;    re- 
cent, 422 ff.;  in  World  War, 
622  ff. 
colonies,  modern,  236;  recent, 

429. 

commercial  policy,  modern, 
242;  recent,  423;  to  United 
States,  501. 

finances  in  World  War,  625. 
manufactures,     modern,     244 ; 

recent,  423,  426,  428. 
political    development,    medi- 
eval, 123;  modern,  255;  re- 
cent, 422,  427. 
shipping,  modern,  234;   about 

1800,  346;  recent,  429,  599. 
statistics,  modern,  238;  recent, 

429;  in  World  War,  623. 
Frankfort  on  the   Main,  45,   156, 

257. 

Free  trade  period,  351. 
Fugger  family,  151  ff. 


Fulton,  Robert,  518. 
Furs,  in  Baltic  trade,  103-252;  from 
America,  477. 

Galveston,  585. 
Genoa,  90,  98. 

Germany,  medieval,  95,  104;  mod- 
ern,   250;    recent,    400;    in 
World  War,  636  ff. 
commercial  policy,  401,  404  ff., 

416  ff. 
manufactures,    modern,     256 ; 

recent,  401,  410  ff. 
mercantile  organization,  413. 
political    development,    medi- 
eval, 124;  modern,  255;  re- 
cent, 400,  637. 
and  Reparations,  627  ff. 
shipping,  414,  599. 
statistics,  409. 

and  the  World  War,  593,  597. 
Gilds,  craft,  49,  140;   in  England, 
211;  in  France,  244;  in  Ger- 
many, 256;   merchant,  47  ff. 
Gladstone,  W.  E.,  371. 
Gold,   in   Australia,   342,   364;    in 

California,  537. 
and  prices,  about  1900,  341. 
in  the  World  War,  600. 
Grain  trade,  recent,  320. 
Greece,  ancient,  17;  recent,  465. 

Hamburg,  74,  156,  257,  335. 

Handicrafts,  36,  43,  48. 

Hanseatic  League,  104 ff.;  decline, 

252. 

Hargreaves,  214. 
Havana,   183. 
Hawkins,  John,  202. 
Henry  IV  of  France,  234. 
Henry  the  Navigator  of  Portugal, 

130. 
Huguenots,   in   England,   212;    in 

Netherland,  194;  in  Prussia, 

258. 

Hungary,  Magyar,  641. 
Huskisson,  370. 

India,  British,  363. 

Indigo,  81;  in  United  States,  471, 

474,  535. 

Industrial  Revolution,  214. 
Insurance,  159,  335. 


674 


INDEX 


Iron,  medieval,  37;  modern,  215; 
recent,  283  ff. ;  as  a  ware,  319. 

in  England,  359,  379;  in  Ger- 
many, 411;    in   the   United 
States,  542,  573. 
Italy,      medieval,      84;      modern, 

263  ff.;  recent,  442  ff. 

agriculture,  446,  449. 

colonies,  448. 

commercial  policy,  443. 

manufactures,  445,  447,  449. 

political  development,  124,  263, 
442  ff. 

shipping,  448. 

Japan,  recent  commerce,.  387. 
conflict  with  Russia,  463. 
and  the  United  States,  550, 

589,  651. 
Jews,   ancient,    12;    medieval,   84, 

117;  in  Poland,  643. 
Jugo-Slavia,  639. 

Kay,  214. 

Law,  John,  159. 

Leghorn,  265,  443. 

Leipzig,  257. 

Levant  trade,  79  ff. 

Linen,  83,  323. 

Liverpool,  224,  383. 

Loire,  58,  61. 

London,  38,  41,  74,  156,  202,  224, 

382. 

Louis  XIV  of  France,  235. 
Lubeck,  105,  253. 

Machine  tools,  284. 

Machinery,  281  ff.;  in  England, 
360;  in  France,  423;  in  Ger- 
many, 403,  410;  in  United 
States,  481,  561,  574. 

Manor,  medieval,  34,  41  ff. 

Manufactures,  medieval,  42;  town, 
48;  modern,  140;  recent, 
281.  See  also  names  of  chief 
countries. 

domestic   system,  211. 
local  distribution,  287. 

Magellan,  134. 

Marco  Polo,  129. 

Market,  medieval,  33;  town,  51; 
decline,  337. 


Marseilles,  18,  99. 
Mercantile   system,   167. 
Merchant,    early,    39;     medieval, 
113;    modern,    141;    recent, 
•334. 

commission,  142. 

wholesale,  142. 
Merchants  Adventurers,  201. 

Staplers,   110. 
Mesta,  179. 
Mesopotamia,  10. 
Miletos,  18. 
Mobile,  548. 

Money,  medieval,  118;  modern, 
136;  in  World  War,  600. 

Napoleon  I,  345. 
Ill,  424,  427. 

Nasmyth,  James,  283. 

Navigation,  early,  13;  medieval, 
38,  72,  129;  modern,  136; 
recent,  302. 

Navigation  Acts,  English,  223,  226; 
reform,  373. 

Necho,  10. 

Netherlands,    modern,    190 ff.;    re- 
cent, 431-ff. 
colonial       and       commercial 

policy,  432. 
manufacturers,  433. 

Neutral  trade,  347. 

New  Orleans,  548,  585. 

New  York,  489,  490,  547,  584. 

Newspaper,  143. 

Nineveh,  11. 

Norway,  439. 

Nuremberg,  45. 

Odessa,   456. 

Orders  in  Council,  347. 

Panama  Canal,  309. 

Partnership,  116ff. 

Pedler,  113. 

Peel,  Sir  Robert,  370. 

Persia,  11. 

Peter  the  Great,  267. 

Petroleum,  320;  in  United  States, 

575. 

Philadelphia,  489,  490,  548,  585. 
Phoenicia,  12. 
Piracy,  75,  136. 
Pisa,  90,  98. 
Pittsburgh,  51,  61,  518. 


INDEX 


675 


Poland,  639,  642. 

Pombal,    186. 

Ports,  medieval,  74;  modern,  137. 

Portugal,   modern,   184  ff.;    recent, 

451. 

Post,  modern,   143;   recent,  310  ff. 
Potash  in  United  States,  471,  476, 

535. 
Prices,  modern,   136;  recent,  341; 

in  World  War,  602. 
Privateers,  medieval,  76;  modern, 

144;   recent,  345. 
Provisions,  322;  in  United  States, 

473,  536,  566,  571. 
Prussia,  rise  of,  257;  and  Austria, 

405;  and  Germany,  417. 

Railroad,  295 ff.;  in  England,  360; 
in    Russia,    461 ;    in    United 
States,   522,   553. 
Reparation  and  the   World  War, 

627. 

Rhine,  58,  61,  255,  347. 
Rhodes,  23. 

Rice  in  United  States,  471,  474,  535. 
Richelieu,  234. 

River    trade,     medieval,    55;     in 
Russia,  455;   in  the  United 
States,  486,  520. 
Roads,  Roman,  28;   medieval,  33, 

54;  recent,  290  ff. 
in  American  colonies,  485;  in 
Russia,     455;      in     United 
States,  514. 

Rome,  26 ff.;  provinces,  27. 
Roumania,  465,  639. 
Rubber,  324. 

Russia,      modern,      267;      recent, 
454 ff.;  in  World  War,  643 ff. 
agriculture,  460. 
commercial  policy,  456,  459. 
manufactures,  458,  460. 
ports,  456. 
transportation,  455,  457,  461. 

Saint  Mary's  Falls  Canal,  557. 
Saint  Petersburg,  267,  456. 
San  Francisco,  585. 
Savannah,  548. 
Seleukia,   22. 
Servia,  465. 

Shipping,     ancient,     13;     Scandi- 
navian, 70;    Mediterranean, 


71;    modem,    137;    recent, 

302;    in    World    War,    599. 

See  also  names  of  countries. 
Siberia,  462. 
Sidon,  13. 

Siemens-Martin   steel,   286. 
Silk,  82,  323. 
Silver,  135,  182. 
Slave    trade,    medieval,    37,    79; 

modern,  222;  recent,  318. 
Smuggling,  on  the  Continent,  348; 

in    England,    225,    369;    in 

France,  242,  424;   in  Spain, 

178,  182. 
South  America,  349. 

commerce  with  United  States, 

550,  589,  651. 
South  Sea  Bubble,  158. 
Soviets  in   Russia,  644. 
Spain,  medieval,  99;  modern,  174; 

recent,  499  ff. 
colonies,  modern,  180;  recent, 

450. 
Speculation,  modern,  156;   recent, 

335  ff. 
Spices,    ancient,    38;     in    Levant 

trade,   79. 
Staple,  110,  127;  in  Germany,  225; 

abolition  of  the,  350. 
Steamboat  in  United  States,  516. 
Steam  engine,  275  ff. 
Steamships,  304  ff. 
Steam  turbine,  276. 
Steel,  recent,  285  ff.;   in  railroads, 

297. 

Stephenson,   295. 
Store,  country,  in  United  States, 

487. 

Stourbridge  Fair,  67. 
Strassburg,  45. 
Suez  Canal,  10,  308. 
Sugar,  medieval,  80;  modern,  136, 

239. 

beet,    325. 

in  United  States,  494,  579. 
Sweden,  266;  recent,  438. 
Switzerland,  435. 
Syracuse,  22. 

Telegraph,  311  ff.;  in  recent  com- 
merce, 332. 
wireless,   313. 
Telephone,    312. 
Textiles,  medieval,  83;  recent,  322. 


676 


INDEX 


Tin,  ancient,  13;  medieval,  109. 
Tobacco,    from    America,    136;    in 

United  States,  471,  473,  535. 
Tolls,  medieval,  57  ff.;  in  France, 

243;  in  Germany,  255,  258; 

abolition,  350. 
Triest,  261. 
Turnpikes,    in    Europe,    291;    in 

United  States,  514. 
Tyre,    13. 

United   States,   recent,   469 ff.;    in 

World  War,  648  ff. 
and   Africa,  491,  586,  651. 
and  Asia,  491,  586,  651. 
and  China,  491,  495,  550,  589. 
and    England,    362,    383,    492, 

499,  548,  586,  608,  613. 
and  West  Indies,  491,  493,  499, 

501,  549. 

agriculture,  472,  475,  567. 
balance  of  trade,  653. 
canals,  519,  556. 
commercial    policy,    498,    508, 

545,  582. 

exports,  471,  502,  530,  566,  650. 
fisheries,  476. 

imports,  477,  540,  578,  652. 
manufactures,    476,    507,    541, 

560,  580,  653. 
ports,  489,  547,  584. 


railroads,  521,  553. 

roads,  489,  514. 

shipping,  495,  501,  505,  523. 
558,  599,  659. 

statistics,  471,  477,  502,  511 
530,  549,  552,  566,  567,  578, 
585,  591,  648,  651,  654. 

waterways,  486,  516,  556. 

Vasco  da  Gama,  132. 

Venice,   72,   75,   79,  84,  87,  90 ff.; 

modern,  263  ff. 
Vicko  von  Geldersen,  115. 

Wares,  ancient,  9,  12,  19;  medie- 
val, 37;  modern,  135;  re- 
cent, 317  ff. 

Wars,  modern,  165;  Thirty  Years', 
255;  recent,  345;  World  War, 
593  ff. 

Watt,  James,  276. 

Wax,  103,  252. 

Wheat,  in  United  States,  471,  473, 
536,  570. 

Whitney,  Eli,  533. 

Winchester  Fair,  68. 

Wool,  medieval,  110;   recent,  323. 

Woolen  manufacture,  in  England, 
215;  in  United  States,  543. 

Zollverein,  403. 


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